On May 19, 2020, voters in the greater Portland, Oregon metro area¹ approved Measure 26-210, imposing a new 1% tax on certain individuals and a 1% business profits tax on certain businesses. Revenue generated by the new taxes will help fund homeless services.

Beginning with tax year 2021, the new taxes are imposed on businesses and individuals in Washington, Clackamas and Multnomah counties (i.e., the Metro area) as follows:

• 1% business profits tax imposed on businesses with gross receipts over $5 million per year
• 1% tax on individual taxable income (both resident and nonresident) over $200,000 for joint filers or $125,000 for single filers

The tax expires December 31, 2030, and requires voter approval to continue after 2030.

Metro Council will establish rules to enforce and implement these new taxes, including rules on filing dates, penalties and interest, forms and documentation, business profits tax determinations, individual income tax residency determinations, exemptions, refunds and deficiencies, overpayments, estimated tax payments, audit authority and other administrative provisions. Further, Metro Council intends to enter into an intergovernmental agreement with an Oregon tax agency (likely City of Portland) to collect the tax.

Implications

This new tax is in addition to other Oregon state and local taxes imposed on businesses and individuals, including:

• Oregon Corporate Income/Excise Tax
• Oregon Corporate Activity Tax
• Multnomah County Business Income tax
• City of Portland Business License/Income Tax
• City of Portland Clean Energy Surcharge
• City of Portland Pay Ratio Surcharge

There is concern that individual partners, shareholders and members of pass-through entities could be subject to double taxation on flow-through income that has already been taxed at the entity level. EY is monitoring developments and will provide information as it is available.

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ENDNOTES

¹ According to the Metro website, "Metro serves more than 1.5 million people in Clackamas, Multnomah and Washington counties. The agency's boundary encompasses Portland, Oregon and 23 other cities — from the Columbia River in the north to the bend of the Willamette River near Wilsonville, and from the foothills of the Coast Range near Forest Grove to the banks of the Sandy River at Troutdale."