Moving to the Pacific Northwest feels like a dream until you stare at your first paycheck. You notice something is missing. Specifically, a chunk of change you weren't expecting to lose. If you’re coming from a place like Washington or Nevada, the sticker shock is real. Oregon doesn't have a sales tax, which is great when you're buying a new mountain bike, but they make up for it by having one of the highest progressive income tax systems in the country.
People always ask, "What is the state income tax for Oregon?" The short answer is: it’s complicated. It’s not just one number. Most folks end up paying somewhere between 4.75% and 9.9%.
Honestly, it feels like a lot. Especially when you realize the top bracket kicks in relatively early compared to other states. But there’s a silver lining called "The Kicker" that literally no other state has.
How the Oregon Tax Brackets Actually Work
Oregon uses a graduated system. This means you don't just pay one flat rate on everything you earn. Instead, your income is chopped up into segments, and each segment is taxed at a different rate. For the 2025 tax year (the returns you’re filing in early 2026), the brackets have shifted slightly to keep up with inflation.
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If you are filing as a single person, the first $4,300 of your taxable income is taxed at 4.75%. That's the lowest it goes. Then, it jumps to 6.75% for everything between $4,301 and $10,750. Once you cross that $10,751 mark, you hit the 8.75% bracket.
Here is the kicker—not the literal Kicker, but the metaphorical one. If you make more than $125,000 as a single filer, every dollar over that amount is taxed at 9.9%.
Married couples filing jointly basically get double those thresholds. They don't hit that 9.9% wall until they surpass $250,000 in taxable income. It sounds like a lot of money, but in a high-cost area like Portland or Bend, that 9.9% starts to bite pretty quickly.
The Oregon Kicker: A Weirdly Awesome Surprise
You might have heard neighbors talking about getting a "kicker" credit. This is Oregon’s unique way of saying, "Oops, we accidentally took too much of your money."
By law, if the state’s actual revenue exceeds the official forecast by more than 2%, the state has to give the excess back to the taxpayers. In late 2025, state economists confirmed a $1.41 billion surplus.
What does that mean for you? If you filed a 2024 return and you're filing a 2025 return, you get a credit. It’s not a separate check in the mail, though. It’s a credit on your 2025 return that reduces what you owe or increases your refund.
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The math for the 2026 filing season is basically this: take your 2024 tax liability (before credits) and multiply it by 9.863%. If you paid $5,000 in state taxes last year, you’re looking at a credit of roughly $493. It’s not life-changing for everyone, but it definitely helps soften the blow of that high marginal rate.
What is the state income tax for Oregon when you include local taxes?
If you live in the Portland metro area, the state income tax for Oregon is only the beginning. You’ve likely heard of the "Multnomah County Preschool for All" tax and the "Metro Supportive Housing Services" tax.
These are separate from the state brackets.
- Preschool for All: This adds a 1.5% tax on taxable income over $125,000 (single) or $200,000 (joint). If you’re a high earner, it goes up to 3% for income over $250,000 (single) or $400,000 (joint).
- Metro Supportive Housing: This adds another 1% tax on taxable income above $125,000 (single) or $200,000 (joint).
When you stack these on top of the 9.9% state rate, some Portland residents are looking at a marginal tax rate north of 13%. That puts it right up there with California.
Standard Deductions and the Federal Subtraction
Oregon doesn’t just take; it gives a little back through deductions. For 2025, the standard deduction for a single filer is $2,835. For married couples filing jointly, it’s $5,670.
One thing that surprises people is the Federal Tax Subtraction. Oregon allows you to subtract a portion of what you paid in federal income taxes from your state taxable income. For 2025, this is capped at $8,500.
However, this subtraction phases out. If your Adjusted Gross Income (AGI) is too high—specifically over $125,000 for singles or $250,000 for joint filers—you might not get to subtract much, or anything at all. It’s a bit of a "tax on a tax" situation that catches new residents off guard.
Why Oregon Doesn't Have a Sales Tax
It’s the great trade-off. Oregon is one of only five states without a general sales tax. You can walk into an Apple Store, buy a $1,200 iPhone, and pay exactly $1,200. No extra 8% or 10% tacked on at the register.
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For people who buy a lot of "stuff"—think cars, appliances, or luxury goods—this is a massive win. But if you’re a high-income earner who lives a frugal lifestyle, you're paying for that lack of sales tax through your high income tax bill.
The state relies heavily on personal income tax for its General Fund. In fact, about 85% to 90% of the state’s general budget comes from people like you paying their income taxes. That’s why the rates stay high. Without a sales tax, there aren't many other places for the government to get its lunch money.
Practical Steps for Filing in 2026
If you’re sitting down to handle your taxes this year, keep these specific points in mind:
- Locate your 2024 Return: You absolutely need your "tax liability before credits" from your 2024 Form OR-40 (usually line 24) to calculate your Kicker.
- Use the "What’s My Kicker?" Calculator: The Oregon Department of Revenue has a tool on their website. You’ll need your SSN and filing status. It’s much easier than doing the math by hand.
- Check for the Oregon Kids Credit: If you have children under age 6 and your income is under $30,000, you might qualify for a refundable credit of up to $1,000 per child. This is a newer credit aimed at helping low-income families.
- Portland Residents, Watch Out: Don't forget the $35 Arts Tax if you live in the City of Portland. It’s a flat fee, but they are aggressive about collecting it.
The state income tax for Oregon might seem steep, but the lack of sales tax and the periodic Kicker rebates make it a unique financial environment. If you’re planning your budget for the year, assume that roughly 7% to 9% of your gross pay will head to Salem, but keep an eye on those local taxes if you're moving into the Portland area.
To ensure you don't miss out on the Kicker, make sure you file your 2025 return by the April 15, 2026 deadline. Even if you don't owe anything, you have to file to claim that credit. If you moved out of the state mid-year, you’ll likely need to file as a part-year resident using Form OR-40-P to get your proportional share of the rebate.