Oregon Basic Business Taxes 2012
Oregon's economic development, finance, and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include single-sales factor income taxes, workers' compensation insurance, and property taxes.
• General sales;
• Use of equipment or other purchases;
• Inventory or goods in transit;
• Worldwide unitary income;
• Motor vehicle purchase;
• Statewide capital or asset value;
• Intangible properties such as stocks, bonds, or securities.
Oregon's effective business tax rate has been ranked in the top five lowest for the past five years by the Council on State Taxation/Ernst and Young analysis.
The tax rate on corporate income of firms doing business in the state is the greater of a minimum tax based on relative sales ($150-$100,000, approximating 0.1 percent) or an income-based levy of 6.6 percent on amounts up to $250,000 and 7.6 percent above that (this second tier switches to $10 million in 2013). To apportion income for corporations with multi-state operations, Oregon relies 100 percent on relative interstate sales-i.e., single-sales factor with throwback rule in adherence to Uniform Division of Income Tax Purposes Act (UDITPA). The state looks at the company's entire federal taxable income, its total sales and its sales derived in Oregon. Then, the state takes the ratio of Oregon sales to total sales and applies that same ratio to the company's total federal income. The result is the company's Oregon taxable income.Consequently, additional corporate assets or payroll in Oregon does not increase tax exposure.
Personal income tax rates start at 5 percent, rising to 9.9 percent on single/joint tax returns with taxable income greater than $125,000(s)/$250,000(j). Same rate applies to capital gains as other personal income.
In addition to federal withholdings and minor payroll-based rates in a few county-regional transit districts, the following apply to businesses with employees in Oregon:
In 2011 - as calculated on the first $32,300 of each covered employee's wages - this tax rate ranges from 2.2-5.4 percent for experienced employers with an average rate of nearly 3.08 percent. The 2011 base rate for new employers is 3.3 percent, which changes to a company-specific, experience-based rate after the first 21-33 months of operations.
Workers' compensation insurance:
Oregon has created a system with some of the lowest costs in the country: rates have declined or remained steady for each of the past 20 years. This is a significant benefit to employers, who may purchase coverage from any provider qualified to write workers' compensation insurance. Alternatively, the State Accident Insurance Fund (SAIF), a public, non-profit corporation, offers coverage, and qualifying large employers may receive certification as self-insured. Actual premiums will depend on the insurance carrier and on industrial and occupational classifications. Employee/employer withholding of $0.014/hour (each) supports state services.
Tangible real and (business) personal property, unless specifically exempted, is subject to local taxation by counties, cities, schools and other districts. Registered vehicles and inventories, including raw materials, goods-in-process and finished products, are entirely exempt. Taxable property is always assessed at an amount equal to or less than real market value. A lower ratio may apply, because any annual appreciation in taxable value may not exceed three percent. The taxable value of new property is determined based on the county's average ratio of assessed value to real market value (AV/RMV) for all property with the same classification (e.g., residential); for new industrial property, the initial AV is often but not always at or near 100 percent of RMV. Additionally, the State Constitution caps every property tax bill at not more than 1.5 percent of RMV, aside from levies for voter-approved bond issuances. The tax rates vary by by location, but average around 1.5-1.6 percent of assessed value. Tax abatement programs are available.
Sales and use taxes:
Other than fuel, tobacco, and other assorted excise taxes, Oregon does not levy sales or use taxes.
Oregon State Contact:
775 Summer Street N.E.
Salem, OR 97301-1280
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.