Pay Your Oregon Small Business Taxes

If you’re an Oregon small business owner, you likely already know that to stay legally compliant, most businesses must pay taxes. Taxes occur at the federal, state, and local levels, making keeping up with all the requirements a stressful prospect even for the most experienced business owners. We’re here to help make this process easier, so we’ve compiled a short guide to Oregon state business taxes. Read on to learn more about what kinds of taxes you may face and how and when to pay them.

If you’re looking for information about federal taxes, head over to our page on federal taxes for small businesses.

Step 1: Establish your Oregon business’s corporate income taxes obligations

The Oregon small business taxes your company will owe depends on its structure, location, and business activities. 

Corporations that do or have the authority to do business in Oregon must pay a corporate excise tax. Corporations that don’t, or don’t have the authority to do business in Oregon but still generate income from a source in Oregon pay business income tax. In other words, if you have a corporation created under Oregon law, you pay Oregon corporation excise tax. 

As of 2024, the Oregon business tax rate is 6.6% on taxable income of $1 million or less. For Oregon taxable income above $1 million, the rate is 7.6%.

All returns, including tax payments, are due by the 15th day of the month following the due date of your corporation’s federal income tax return. 

Pass-through entities like limited liability companies (LLCs), sole proprietorships, and partnerships are taxed differently than corporations. These entity types pass their income through to the owners, who then report the income on their personal income tax returns. 

In Oregon, partnerships, S corporations, and LLCs must pay a $150 minimum excise tax for the privilege of doing business in the state. LLCs get to choose if they want to be taxed as an S corporation, C corporation, or as a pass-through entity like a partnership or sole proprietorship. After they choose which option they want, they’ll be subject to the tax obligations of their chosen entity. 

Cities and counties in Oregon may also impose their own income taxes, which are separate from the state’s. 

Step 2: Determine your Oregon business’s employment taxes

Employers who pay employees that work in Oregon must report and pay Oregon payroll taxes. To avoid confusion, keep in mind that the Oregon Department of Revenue’s website uses the terms “payroll tax” and “withholding tax” interchangeably. 

Every employer must also register for a business identification number (BIN) as part of the reporting process. Oregon employers use the Combined Payroll Tax Reporting System to report and pay their payroll taxes. 

The tax rates range anywhere from 0.9% to 5.4%. The taxable wage base for 2024 is $52,800. The wage base is the maximum amount of an employee’s pay that can be subject to payroll tax in a calendar year. Oregon payroll taxes are due on the last day of the month following the end of the quarter (April 30, July 31, October 31, and January 31). 

Step 3: Establish your Oregon business’s additional state tax obligations

There are some other taxes Oregon business owners should be aware of, as well as the ones mentioned above.

Oregon Corporate Activity Tax

The Oregon Corporate Activity Tax (CAT) is a relatively new tax implemented in 2020, designed to provide funding for public education in the state. It targets businesses for the privilege of doing business in Oregon and is calculated on the basis of their commercial activity in the state. Specifically, the CAT applies to businesses, including corporations, partnerships, sole proprietorships, and other entities, with Oregon gross receipts exceeding $1 million in a tax year. The tax rate is 0.57% on gross receipts above this threshold, plus a flat tax of $250.

It’s important to note that the CAT is in addition to — not a replacement for — the state’s income tax or the minimum excise tax. Businesses are required to register for the CAT if their gross receipts meet the threshold, and they must make quarterly estimated payments. The introduction of the CAT adds another layer to Oregon’s tax landscape, emphasizing the need for businesses to carefully manage their tax reporting and payment obligations.

State Sales Tax

Oregon doesn’t have a general sales tax.

Franchise/Privilege Tax

A franchise tax is a tax on the privilege of doing business in a state. In Oregon, they call it an excise tax. This is imposed on C corporations, S corporations, partnerships, and LLCs. The amount is $150.

Unemployment Tax

When an Oregon employer pays payroll taxes, that money is put into the Oregon Unemployment Insurance Trust Fund. This fund pays unemployment insurance benefits to Oregon residents. The unemployment tax rate is on a self-adjusting schedule. For 2024, the average rate will be 2.4% on the first $52,800 paid to each employee. 

These taxes are due on the last day of the month following the end of the calendar quarter. 

Excise Tax

An excise tax is a tax on a certain good or service. For example, in Oregon, there are special taxes on cigarette and tobacco products, marijuana, bicycles, and the rental of heavy equipment.

Step 4: Prepare to file and pay your Oregon business taxes

The main taxing agency in Oregon is the Department of Revenue. You can file your returns by mail or online. You can submit electronic filings through either an approved software vendor or the IRS’s Modernized e-File (MeF). To sign up for MeF, you’ll need to have basic information about your business handy (for example, Federal Employment Identification Number, business address, etc.). You can also pay your taxes electronically with the Department’s Revenue Online system or by mailing a check. 

As you prepare to file your business taxes in Oregon, you need to have your business documents in order. This means that tracking your business’s expenses and income is very important. You may need previous tax returns, accounting records, receipts, and legal documents. This is where we can help. With our ZenBusiness Money tool, we can help you keep track of invoices and manage your business finances. 

Do I need an accountant?

Although hiring a tax preparer is never required, in most cases, a small business needs professional accounting help to make sure their taxes are done correctly. You can face serious consequences, such as penalties, fines, and falling out of good standing with the state if you make errors on your tax returns. Missing a filing deadline can also be a costly mistake.

Not sure how to stay compliant? Learn more about legal compliance for small business owners.

Tax Advantages for Small Businesses in Oregon

Oregon offers several tax advantages that can benefit small businesses, making it an attractive location for entrepreneurs and business owners. Understanding these benefits can help maximize your business’s financial efficiency and growth potential. Here are key tax advantages in Oregon that small business owners should be aware of:

1. No Sales Tax: One of the most significant advantages for businesses operating in Oregon is the absence of a state sales tax. This not only simplifies accounting and reduces administrative burdens but can also lower the overall cost of goods and services for consumers, potentially increasing competitiveness and customer spending.
2. Research and Development Tax Credits: To encourage innovation and investment in new technologies, Oregon offers tax credits for qualified research and development activities. Businesses engaged in research and development can benefit from these credits, reducing their tax liability and supporting continued innovation and development efforts.
3. Property Tax Exemptions: In certain areas, Oregon provides property tax incentives for businesses that invest in real estate or equipment. Enterprise zones and other targeted programs offer property tax exemptions or deferrals, reducing the cost of expanding or upgrading facilities and encouraging economic development in those areas.
4. Strategic Investment Program (SIP): The SIP offers significant property tax exemptions for large capital investments in rural and urban areas, targeting sectors such as manufacturing and renewable energy. This program is designed to attract and retain large-scale investments by offering tax incentives that can substantially reduce long-term operating costs.
5. Film and Video Incentives: For businesses in the film and video production industry, Oregon offers several tax incentives, including cash rebates and tax credits. These incentives are designed to attract productions to the state, benefiting local businesses and stimulating the creative economy.

How We Can Help

We understand that taxes can feel a bit overwhelming, but don’t panic. We’re here to support you with the services and resources you need to help you prepare to file your taxes. As mentioned above, ZenBusiness Money can help give you control over your finances. The app allows you to easily send custom invoices, accept credit card and bank transfer payments, and manage your clients from an easy-to-use dashboard to make things easier at tax time. 

If your small business is still in the formation stage, our Oregon Oregon LLC formation services or corporation formation services can help you get started.

No matter what stage your business is in, we have the tools you need to help you succeed.