Oregon employers must begin withholding a new statewide transit tax beginning July 1, 2018. There is no employer paid portion of the new transit tax; it is paid entirely by individual employees through payroll withholding. The tax must be withheld from wages of Oregon residents (regardless of where the work is performed) and wages of nonresidents of Oregon who perform services in Oregon.
The tax rate for this new transit tax is one-tenth of one percent (or 0.001).
The tax is calculated based on the employee’s wages as defined in ORS 316.162 – all “remuneration for services performed by an employee for an employer, including the cash value of all remuneration paid in any medium other than cash.”
Any employees who are not subject to regular income tax withholding due to high exemptions claimed, wages below the threshold for traditional income tax withholding, or any other factors will be subject to the new statewide transit tax withholding.
Employers who knowingly fail to withhold or report the new transit tax will be subject to a penalty of $250 per employee, up to a maximum penalty of $25,000.
If you have any employees who live or work in Oregon, it is advised that you confirm with your payroll provider that the withholding and reporting of the new transit tax will begin July 1st to avoid any potential penalties for noncompliance.