Multnomah County voters approved two new local income taxes on higher wage earners.  The revenue generated from these new taxes will fund the following initiatives:

Note: An employee may be subject to both taxes. 

For both taxes, employers must comply with the withholding requirement effective January 1, 2022.  Withholding is voluntary beginning January 1, 2021.  For 2021, employers must offer employees the option to withhold from their wages once the employer’s payroll system(s) can be configured to capture and remit the taxes withheld.  Penalties will not be assessed if withholding is not available in 2021.

A brief overview of each tax is summarized below.

Multnomah County Preschool for All Income Tax

What is it?  

This income tax provides funding to create tuition-free preschool programs in Multnomah County.

Who is subject to the tax?

Multnomah County residents will have 100% of their Oregon taxable income subject to the thresholds.

For Multnomah County nonresidents, only Multnomah County sourced income is subject to the tax.  

Example: If a nonresident employee works 50% of the time in Multnomah County, 50% of their income would be subject to the tax thresholds. If you are working remotely (outside of Multnomah County) for a Multnomah County employer, your income would not be subject to the tax.

What is the tax rate?  

The tax rate is 1.5% of Oregon taxable income over $125,000 for single filers and $200,000 for joint filers.  The tax rate is 3% of income over $250,000 for single filers and $400,000 for joint filers.   

What are Employer Responsibilities?

Employers are required to withhold Multnomah County tax only from employees working in Multnomah County.

For more information regarding employer responsibilities, please click here to view Multnomah County’s government official website. 

Portland Metro Supportive Housing Services Income Tax

What is it?  

This income tax will fund supportive housing services for persons experiencing, or who are at risk of experiencing homelessness in the Metro area.

Who is subject to the tax?

All Metro district residents are subject to the tax, regardless of where the income is sourced.

For non-residents, only the wages earned while working in the Metro district are subject to the tax.

What is the tax rate?  

The Portland Metro tax rate is 1% of Oregon taxable income for residents and 1% of Portland Metro sourced income for nonresidents who work in the Portland Metro area. The first $200,000 of taxable income for joint filers is exempt, and the first $125,000 for single filers is exempt. 

What are Employer Responsibilities?

Employers are required to withhold Portland Metro tax only from employees working in the Portland Metro area.

For more information regarding employer responsibilities, please click here to view Oregon’s government official website. 

Remittance & Reporting

Both taxes are collected by the City of Portland Revenue Division.  Multnomah County Preschool for All Personal Income Tax and Metro Supportive Housing Services will have separate withholding returns remitted to the City of Portland.  A quarterly return and payment are due on the last day of the month following the end of the calendar quarter.  Annual reconciliation returns and copies of Forms W-2 are filed by January 31 following the tax year to which they relate.  

Your Next Steps

If your business is in Multnomah County and/or Portland Metro area and/or you have employees who work in Multnomah County and/or Portland Metro area, make sure to set up corresponding withholding taxes for these employees no later than for the first 2022 check date.  You can choose but are not required to set up the Multnomah County and/or Portland Metro area taxes for 2021 check dates.

How PrimePay Can Help

For clients who subscribe to PrimePay’s tax filing service, deposits, and returns for both the Multnomah County Preschool for All Income Tax and Portland Metro Supportive Housing Services Income Tax will be remitted on your behalf.  

Current PrimePay clients who are affected by the new local income taxes will get a separate communication.

Interested in a payroll, HR, and Tax solution designed for your exact needs?

Working with a payroll service and human capital management (HCM) provider can help you stay compliant.

Click here to learn more or fill out the form below and get your business started with the right payroll solution for you.

Disclaimer: Please note that this is not all-inclusive. Our guidance is designed only to give general information on the issues actually covered. It is not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Consult your own legal advisor regarding the specific application of the information to your own plan.