1. Overview of Income Tax in Portland

To answer the question directly: Yes, Portland does have an income tax, but it is not exactly like a typical city tax that you might expect in other cities across the United States. Portland itself, as a city, does not levy its own traditional income tax. However, Multnomah County, where Portland is located, and Metro, the regional government, both have specific income taxes that apply to residents and workers in the area.

Let’s break down the different tax components:

• Portland's City Income Tax: The city of Portland does not impose a general income tax on its residents or workers.

• Multnomah County Personal Income Tax: Multnomah County, where Portland sits, introduced a personal income tax aimed at funding specific services, particularly in the realms of homelessness and education.

• Metro Income Tax: The Metro regional government, which covers Portland and surrounding areas, also levies an income tax to address regional issues like affordable housing and supportive services.

2. Multnomah County Income Tax

Multnomah County implemented its income tax with the primary purpose of funding homeless services and housing assistance programs. The tax, known as the Multnomah County Preschool for All Personal Income Tax, came into effect after voters approved it in 2020.

• Tax Rates: This income tax is progressive, meaning it impacts higher earners more significantly. The tax applies to individuals with incomes over $125,000 and joint filers with incomes over $200,000. The rate starts at 1.5% for incomes exceeding these thresholds. An additional 1.5% on income over $250,000 for individuals or $400,000 for joint filers. The rate will increase by 0.8% in 2026
  
  

• Who Pays: The tax is paid by anyone who resides in Multnomah County or earns income while working in the county. This includes both residents and non-residents who work within county boundaries.
  
  

• Use of Funds: The revenue from this tax is specifically earmarked for funding preschool education programs, with the aim of providing free preschool education for all 3- and 4-year-olds in the county.
  
  

3. Metro Income Tax

Another key element of Portland’s local tax system is the Metro Supportive Housing Services Income Tax, which also took effect after voter approval in 2020.

• Tax Rates: The Metro tax applies to individuals earning over $125,000 annually and households earning over $200,000. The tax rate is 1% of taxable income above these thresholds.
  
  

• Who Pays: Similar to the Multnomah County tax, this tax is levied on residents and workers in the Metro region, which includes Multnomah, Clackamas, and Washington counties.
  
  

• Purpose of the Tax: The funds generated by this tax are dedicated to addressing homelessness and supporting affordable housing initiatives across the region.

4.  Arts Tax (Arts Education & Access Fund)

Each Portland resident age 18 and older that earns income above the federal poverty level and has $1,000 or more income is required to file and pay the arts tax.

• Tax Rates: The tax is a flat $35 .

• Who Pays: City of Portland residents 18 years or older who have $1,000 or more of annual income and are in a household above the federal poverty level are liable for the Arts Tax. If your household's annual income is at or below the federal poverty level, you may request an exemption.

• Purpose of  the Tax: Funds are distributed first to School Districts for the purpose of hiring certified Arts Teachers for K-5 students. Next, funds are distributed to the City Arts Program for the purpose of coordinating, supporting, and reporting on arts education services within School Districts. All remaining funds are currently distributed to the Regional Arts & Culture Council (RACC) to provide grants for non-profit Portland arts organizations.
  
  

5. Oregon State Income Tax

In addition to the specific local taxes in Multnomah County and the Metro region, residents of Portland are also subject to Oregon’s state income tax. Oregon has a progressive state income tax structure, which applies to all residents, including those in Portland.

• Tax Rates: As of 2024, Oregon’s income tax rates range from 4.75% to 9.9%, depending on income levels. Higher earners pay a higher percentage of their income in state taxes.
  
  

• No Sales Tax: One notable aspect of Oregon’s tax system is that the state does not impose a sales tax. This means residents do not pay additional taxes on goods and services, which can help offset the higher income tax rates.
  
  

6. Payroll Taxes in Portland

Aside from income taxes, workers in Portland may also encounter payroll taxes. Employers in the Portland area, including self-employed individuals, are required to pay a Portland Business Tax (which affects businesses) and a TriMet Payroll Tax, which funds the local public transportation system.

• TriMet Payroll Tax: Employers in the region pay a tax of approximately 0.8% of gross payroll to fund TriMet, Portland's public transportation network.
  
  

• Portland Business License Tax: While not directly an income tax on individuals, this tax affects businesses operating in the city and is based on their net income. It is approximately 2.6% of net business income, though certain exemptions apply.
  
  

7. Property Taxes in Portland

Though not related to income, another significant tax that residents of Portland should be aware of is property tax. Oregon has relatively high property tax rates compared to national averages, and these rates can vary significantly depending on the location within Multnomah County or surrounding areas.

8. Key Points to Consider for Residents and Workers

If you are living in or considering moving to Portland, there are several key factors to consider when it comes to taxes:

• Combined Tax Burden: When you combine Oregon’s state income tax, Multnomah County’s personal income tax, and the Metro regional tax, higher-income earners in Portland can face a significant overall tax burden.

• No Sales Tax Benefit: While income taxes may be higher, the lack of a sales tax can be a financial advantage, particularly for large purchases like cars, electronics, and household goods.

• Property Taxes: For homeowners or prospective buyers, property taxes are another important consideration. Portland’s relatively high property tax rates can impact housing affordability.

9. Frequently Asked Questions (FAQs)

Q1: Does Portland have a city income tax? No, Portland does not have a city-level income tax. However, residents and workers in Portland are subject to income taxes from Multnomah County and Metro.

Q2: How much is the Multnomah County income tax? The Multnomah County income tax is 1.5% to 3%, depending on income levels, and applies to individuals earning over $125,000 and households earning over $200,000.

Q3: What is the Metro income tax? The Metro income tax is 1% on income over $125,000 for individuals and $200,000 for households. It funds homelessness and affordable housing initiatives.

Q4: Does Oregon have a state income tax? Yes, Oregon has a state income tax with rates ranging from 4.75% to 9.9%, depending on income levels.

Q5: Is there a sales tax in Portland? No, Portland, like the rest of Oregon, does not have a sales tax.

Q6: Are there any payroll taxes in Portland? Yes, there is the TriMet payroll tax, which employers pay to fund the public transportation system, and the Portland Business License Tax, which affects businesses based on their income.

Conclusion

Portland, Oregon, may not have a city-specific income tax, but residents and workers are subject to income taxes from Multnomah County, the Metro region, and the state of Oregon. These taxes fund essential services such as education, housing, and transportation, but they also create a notable tax burden for higher-income earners. For those living or working in Portland, understanding the local and state tax landscape is crucial for financial planning.