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Effective January 1, 2021, two new Oregon local income taxes apply, the Portland Metro Supportive Housing Services Income Tax and the Multnomah County Preschool for All Income Tax. Beginning April 2021, employers are able to remit withholding tax payments and file returns for these new local taxes through the Portland Revenue Division.

Following is an overview of these taxes.

Contents

Introduction

Return filing and tax payment due dates

Taxable wages

Portland Metro Supportive Housing Services Income Tax

Multnomah County Preschool for All Income Tax

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Introduction

For 2021, employers have been asked to offer employees the option of having these income taxes withheld as soon as their payroll systems can be configured to capture and remit the taxes withheld. Individual taxpayers can make estimated tax payments for the amount owed for tax year 2021; however, penalties will not be imposed for estimated tax payments not made in 2021 provided the tax is paid with the annual return due April 15, 2022.

Effective January 1, 2022, all employers must comply with the withholding requirements.

• Register a business for the Portland Metro and/or Multnomah County income tax here.
• Register for electronic payment and filing with Portland Revenue Online (PRO) here.
• Determine if a residence or workplace is in the Portland Metro area here.
• Employers can file and pay withholding taxes at Pro.Portland.gov.

Return filing and tax payment due dates

Both the Portland Metro and Multnomah County income tax return and tax payment due dates conform to the Oregon income tax withholding due dates. Returns are due quarterly as shown in the table below. Annual reconciliation returns and copies of Forms W-2 are filed by January 31 following the tax year to which they relate. Employees also must receive a copy of the Form W-2 by January 31. Withholding tax payment deadlines follow the federal employment tax deposit rules. (2021 Oregon Combined Payroll Tax Report, Instructions for Oregon employers.)

*The lookback period is the 12-month period that ended the previous June 30. The lookback period for agricultural employers is the calendar year before the calendar year that just ended.

Taxable wages

The definition of taxable wages for the Portland Metro and Multnomah County income tax follows the same definition as used for Oregon state income tax in ORS 316.162.

Portland Metro Supportive Housing Services Income Tax

Effective January 1, 2021, the Portland Metro Supportive Housing Services Income Tax provides funding for housing services for persons experiencing, or who are at risk of experiencing, homelessness in the metro area. (Portland Metro Code Title VII, Section 7.06.)

The program is funded by two separate taxes:

1. An income tax on net income of businesses with gross receipts above $5 million (more information concerning the business tax is available here)
2. A personal income tax of 1% on taxable income above $125,000 for those filing single or married filing separately ($200,000 for those filing jointly, qualifying widow(er) or head of household)

• Resident and nonresident taxation. The personal income tax applies to Oregon taxable wages for residents of the Portland Metro district, and Oregon taxable income attributable to sources within the Portland Metro district for nonresidents, including wages received by a nonresident attributable to work performed within the Portland Metro district.
• Income tax withholding. Beginning January 1, 2021, withholding is voluntary. However, an employer must offer to its employees in writing to withhold the Portland Metro personal income tax from the employees' wages as soon as the employer's payroll system(s) can be configured to capture and remit the taxes withheld. Notice can be provided by giving employees Form Metro OPT. (See "withholding certificate" below.)

  Beginning January 1, 2022, and each year thereafter, withholding is mandatory for all employees who work in the Metro District and earn $200,000 or more during the calendar year, unless the employee opts out.

  An employee below the $200,000 earning threshold or with other tax considerations may opt in to withholding at an employee-designated amount, based on the employee's tax situation. Or an employee who meets the mandatory withholding criteria may choose to opt out of withholding, based on the employee's tax situation.

• Supplemental withholding rate. If an employee has Portland Metro tax withholding established, supplemental payments should have withholding applied at 1% of the payment. If an employee does not have Portland Metro tax withholding established, no withholding is required on supplemental payments.
• Withholding certificate. Employees subject to the Portland Metro tax make their opt-in/opt-out and other withholding elections by completing Form Metro OPT.
• Returns. Employers are required to file quarterly Form WSHS-QR.
• Withholding tax payments. For withholding payments made by check and not included with the quarterly withholding tax return, Form WIT-V is used.
• Penalties. Beginning January 1, 2022, if an employer fails to remit in whole or in part any tax withheld at the time required, the Tax Administrator will assess a late-payment penalty of:
  • 5% of the balance of the tax paid after the original due date will be assessed if the failure to remit is for a period less than or equal to four months
  • An additional 20% of the balance of the tax paid after the original due date will be imposed if the failure to remit is for a period longer than four months
  • An additional penalty of 100% of the balance of the tax paid after the original due date of all tax years will be imposed if the failure to remit is for three or more consecutive tax years

  The Administrator may waive all or any part of the penalty imposed if the employer shows that there was reasonable cause for the failure to remit the withheld taxes or any portion of the withheld taxes and that the employer acted in good faith to file and remit the taxes withheld.

• For questions or assistance contact the Tax Administrator at EmployerWithholding@portlandoregon.gov or call +1 503 865 4748.

Multnomah County Preschool for All Income Tax

Effective January 1, 2021, the Multnomah County Preschool for All Income Tax provides funding to establish a tuition-free preschool program. (Multnomah County Code, Chapter 11, §500-§560.)

The program is funded by a personal income tax based on the following thresholds:

• Single taxpayers. All Oregon taxable income over $125,000 is taxed at 1.5%. All income above $250,000 is taxed at 3%. In 2026, the tax rate increases by 0.8%
• Joint filers. All Oregon taxable income over $200,000 is taxed at 1.5%. All income above $400,000 is taxed at 3%. In 2026, the tax rate increases by 0.8%.

• Resident and nonresident taxation. All Oregon taxable income of Multnomah County residents is subject to the tax. Only Multnomah County-sourced income is subject to the tax if employees live outside of Multnomah County. If employees are working remotely (outside of Multnomah County) for a Multnomah County employer, their wages would not be subject to the tax. For example, if nonresident employees work 50% of the time in Multnomah County, 50% of their income would be subject to the tax.
• Income tax withholding. Beginning January 1, 2021 withholding is voluntary. However, an employer must offer to its employees in writing to withhold the Multnomah County personal income tax from the employees' wages as soon as the employer's payroll system(s) can be configured to capture and remit the taxes withheld.

  Beginning January 1, 2022, and each year thereafter, withholding is mandatory for all subject employees earning $200,000 or more during the calendar year, unless the employee opts out.

  An employee below the $200,000 earning threshold or with other tax considerations may opt in to withholding at an employee designated amount, based on the employee's tax situation. Or an employee who meets the mandatory withholding criteria may opt out of withholding, based on the employee's tax situation.

• Supplemental wages. If an employee has Multnomah County withholding established, supplemental payments should have withholding applied at 1.5% of the payment for employees with subject wages between $200,000 - $400,000. For employees with subject wages above $400,000, supplemental payments should have withholding applied at 3%. If an employee does not have Multnomah County withholding established, no withholding is required on supplemental payments.
• Withholding certificate. Employees subject to the Multnomah County income tax make their opt in/opt out and other withholding elections by completing Form METRO/Multco OPT.
• Returns. Employers are required to file quarterly Form WPFA-QR.
• Withholding tax payments. For withholding payments made by check and not included with the quarterly withholding tax return, Form WIT-V is used.
• Penalties. Beginning January 1, 2022, when an employer fails to remit in whole or in part any tax withheld at the time required, the Tax Administrator will assess a late payment penalty of:
  • 5% of the balance of the tax paid after the original due date will be assessed if the failure to remit is for a period less than or equal to four months
  • An additional 20% of the balance of the tax paid after the original due date will be imposed if the failure to remit is for a period greater than four months
  • An additional penalty of 100% of the balance of the tax paid after the original due date of all tax years will be imposed if the failure to remit is for three or more consecutive tax years

  The Administrator may waive all or part of the penalty imposed if the employer shows that there was reasonable cause for the failure to remit the withheld taxes or any portion of the withheld taxes and that the employer acted in good faith to file and remit the taxes withheld.

• For questions or assistance, email pfatax@multco.us.

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