Like it or not, April 15 rolls around year after year. And year after year, your taxes are due. While you may be aware of the fact that you owe taxes to the federal government, you may not realize that the individual state you live in also imposes taxes. State taxes and federal taxes are not the same: once you finish the latter, you’ve still got to file and submit the former.

In this post, we will cover what you need to know to get started on your Oregon state taxes. The last thing you want is to file them improperly, or miss a deadline and wind up with punishing late fees on your place — or even worse, a costly audit. Make sure you stay ahead on your taxes by reading through this handy guide!

As you’re probably well aware, the US federal government has the right to levy a tax on its citizens. It also guarantees the right to states to do the same on its citizens as well. That means that when tax season rolls around, you’ll have to file tax returns both for your federal income taxes and for your state income taxes.

Oregon imposes most of the taxes that you might be familiar with: it taxes income, property, and certain goods like alcoholic beverages and gasoline. However, the state famously has no sales tax. That means that when you go to purchase something at the store, the price you see on the sticker is the price you pay at the counter. We’ll cover sales tax in a little more detail below, along with all the other taxes that you can expect when you file as an Oregonian. Read on for a thorough look at the state’s taxes, rates, and what you can do to better prepare yourself for the April 15th filing deadline.

Oregon has what’s known as a progressive tax system. That means the more you earn each year, the larger your fair share of taxes are. However, unlike the federal tax system, the Oregon state tax system tops out at a fairly low 9.9%. That bracket is also reserved for the very topmost percent of earners, those who make over $125,000 (for single earners). The majority of earners (those who earn over $8,700, but under $125,000) pay 9%.

Personal income tax is a hassle. In addition to filing your federal return every year, you’re also responsible for state tax returns too. That means that you have to be aware of all the different deductions, exemptions, and tax credits that your state may offer. We’ll cover all that and more in the next sections that follow.

However, if you find that you still need a little extra helping hand with taxes this year, don’t sweat it. That’s where Community Tax can help. Our tax preparation professionals are here to help you make the most of your tax returns this year. If you’re hoping for a refund, let us help you find everything you need to claim what you deserve.

Capital gains are earnings that you make through the stock market, selling property, earning dividends, or any other acquisition of capital. This differs from your salary or paycheck from work, which at least at the federal level, is taxed differently.

In Oregon, however, capital gains are treated as ordinary income. That means that when you go to file, you’ll add your capital gains to the amount you may have earned through your wages from your job. How does this work? Let’s take a look at an example.

Suppose you are single, and that you earned a total of $100,000 from your income. That would ordinarily put you in the 9% bracket above. Let’s say, however, that you sell a timeshare near crater lake and profit $30,000 from it. That boosts your total income up to $130,000 for the year. Because your capital gains income are treated as ordinary income, your new total yearly earnings put you in the next tax bracket up: 9.9%.

Plenty of states have claims to fame: California’s gorgeous beaches, New York’s sprawling metropolis, Austin’s lively music scene. In addition to everything else you love about Oregon, like coffee shops, bookstores, quiet rainy days and gorgeous countryside, you get another benefit: there’s no sales tax in Oregon.

That’s right. When you go to buy something in a store in Oregon, you’ll be benefitted by the fact that no additional charge is added at the counter. Plenty of states have sales taxes ranging from 5 to even near or above 10 percent. For larger purchases, that can rapidly add up. If you’re buying a $1,000 item, like a new laptop, an 8% sales tax can mean you’re now looking at a $1,080 price tag. In Oregon, you won’t have to worry about that.

You should know that there are still other taxes in Oregon, and the state does make up for the lost revenue from sales tax in other ways. However, the lack of sales tax is especially helpful to those in lower income brackets. Think about it this way: even if you make less money, you’re still paying the same percentage sales tax as someone who’s making more money — but that same percentage sales tax is a larger portion of your overall income.

That means that high sales tax has an outsized effect on communities who make less money. By avoiding a sales tax and drawing funds from other sources, the state of Oregon is able to help its lower-income residents get by a little easier.

Some goods and services are taxed at a slightly higher rate than normal because of the belief that they might do damage if too easily available. That’s why in many cases these taxes, officially referred to as excise taxes, are called sin taxes. Oregon is no different from other states in the USA in that it does charge excise taxes. While there is no sales tax in the state of Oregon for ordinary goods like groceries, housewares, or clothing, you’ll still have to pay a small tax on the purchase of items like alcohol, marijuana, and gasoline.

Here is a list of the excise taxes that you’ll encounter in Oregon, along with the rates you’ll pay.

As with most states, alcohol in Oregon is taxed depending on the ABV — alcohol by volume, or percentage alcohol content. Beverages with higher content are taxed at a higher rate. Here are the rates wholesalers face when they purchase alcohol for their stores or restaurants. Bear in mind that though these taxes are placed on wholesale liquor, retailers usually add it to the amount you pay at the register.

• Oregon Beer Tax - $0.08/gal
• Oregon Wine Tax - $0.87/gal
• Oregon Liquor Tax - $21.98/gal

Tobacco is often taxed due to its ill health effects both for the user and those exposed to tobacco smoke. Oregon has a fairly hefty tax on tobacco: when you go to pick up a pack, add $1.33 to the price tag.

If you enjoy partaking in marijuana products, either for health reasons or simply for fun, you’re in luck: it’s totally legal in Oregon. However, the state does see it as an opportunity to bring a little extra tax revenue. If you’re planning on enjoying a puff or two — or maybe even a special brownie — you’ll have to hand over an extra 17% tax on all marijuana products.

Gas is taxed in every state in an effort to provide local authorities with road repair funds. Oregon is no different. As you fill up your tank, expect a $0.34 per gallon tax on gasoline.

Oregon imposes a tax on insurance companies in order to help fund its own Medicaid program. Insurance companies are taxed at a rate of 1.5%, and hospitals are taxed at 0.7%. These prices are often pushed onto consumers in the form of higher premiums, however, which is good to know as you review private insurance options in Oregon.

Property taxes are a form of tax that affects owners of property. This applies not only to homeowners, but also to those who own business or other commercial property. The way that property taxes are assessed is based on the fair market value of the real estate in question. Basically, that’s the amount that the property would sell for if it were put up to market today.

Like most US states, property taxes are decided by individual counties in Oregon. So, that means that they are not the same from place to place. There is variation not only in the percentage of property taxes assessed, but also in the actual dollar amount due to differing property values. For instance, a large historic home near a hip neighborhood in downtown Portland might have both a high percentage property tax assessed and a high property value, resulting in high taxes overall.

The highest property taxes in Oregon are found in Clackamas County, where the average yearly amount paid is a whopping $2,814. The lowest taxes are found in Gilliam county, clocking in at only $965.

That said, there isn’t as much variation in Oregon’s property tax percentages as there is in most states. Plus, there’s no reason to feel too bad about paying property taxes — the funds from these levies go toward valuable services, like funding for public schools and libraries. Here are a few more quick facts regarding Oregon property tax:

• The median property tax in Oregon was $2,241, 15th highest in the nation. That’s mostly due to the high density of the population around Portland, however, where property taxes tend to be higher.
• The average Oregonian spends 3.59% of their income on property tax — 16th highest in the nation.
• However, the average percentage value of property taxes in Oregon is only 0.87%, which is solidly in the middle of the pack at 26th highest in the USA.

How are property values assessed?

In the United States, government officials go through cities and towns across the country every few years to value properties. This then decides the fair market rate discussed before. It’s good to know that property values around town are likely to change with fluctuations in the market, so you might find that your rate of property tax will change from year to year.

Be aware of this as you head into tax season, because the value of your property may have changed since the last time you filed. That means that your property tax burden may fluctuate as well.

An estate or inheritance tax is a tax levied on the property or other assets that are passed from a deceased person to their next of kin. Unlike many states, Oregon does impose an estate tax. However, this is only levied on properties valued at over $1 million. The percentage rate that you are taxed is dependent on the amount of money the estate is valued at. It can fall anywhere between 10% and 15%, but in order to figure out exactly how much you’ll owe, you can use Form OR 706.

It’s also a good idea to know that above certain amounts (as of 2019, $11.4 million) the federal government can levy its own estate tax, so the associated forms will need to be filled out. Be sure to speak with a tax expert when planning your estate to be sure that you are able to pass on as much as you can to your loved ones.

States often provide their taxpayers with relief in three different ways: deductions, exemptions, and tax credits. Deductions reduce the amount of your income on which you have to pay taxes, exemptions make a portion of your income immune to taxation, and tax credits are a dollar-for-dollar reduction in the amount you owe. First, let’s go over the tax credits offered to Oregon state taxpayers.

• Personal exemption credit: this is an amount that you can reduce from your overall tax burden. It’s restricted to individual taxpayers who make under $100,000 a year, and joint-filing married couples who make under $200,000. Details on the amount you can claim are available online, as it may vary depending on your family income.
• Earned income credit this credit is based on the federal program of the same name, and you qualify for the Oregon version of this credit. It’s made to help families who have lower income, and so is dependent on both your income and the number of dependents you can claim.
• Assorted other credits: in addition to the personal exemption credit and the earned income credit, there are numerous miscellaneous situations that you could claim a tax credit for in Oregon. These range from political contributions to credits for rural health practitioners, from childcare to energy conservation, and even a credit for bovine manure production and collection. A full list of these credits is available on the Oregon Department of Revenue website, and can be found on tax forms when you file.

In addition to tax credits, Oregon also offers relief in the form of exemptions and deductions. Here are a few available that you should be aware of as you prepare your taxes this April.

Oregon offers exemptions to those who work in certain areas, as well as to the Indigenous people of the state. Here are the categories that apply:

• Air carrier employees
• American Indian enrolled tribal members living and working in Indian country
• Amtrak Act workers
• Casual laborers
• Domestic service workers

The easiest way to claim a deduction on your Oregon tax returns is by using the standard deduction. You can find the amount that you can claim in the graphic below

If you choose instead to itemize your deductions, there is a list of available options on the Oregon tax form W-4. The itemized deductions include medical expenses over 10% of your gross income, qualifying mortgage interest, charitable contributions, and others.

With a few possible taxable sources of income, including property, your paycheck, and even capital gains, it can be hard to keep everything in order as you go to file your Oregon state taxes. Plus, if you’re hoping to maximize the amount you benefit from deductions, tax credits, and exemptions, you’ve got your work cut out for you this tax season.

We’ve put together this guide to assist you as you figure out what you need to keep track of when it’s time to file. For more help on your state and federal tax returns, it’s often worth it to consult with a tax expert. Community Tax’s team of expert tax preparers can help you get the refund you deserve — and keep you out of the headache of audits!

Before you get to work putting your returns together, remember to have these items on file:

• The previous year’s tax returns.
• All W-2’s mailed by your employers.
• Statements of earnings from any investments or other capital gains.
• Your social security number.
• Proof you may need for any exemptions you’re applying for.

When it’s time to actually file and pay your taxes, you might be a little confused about how exactly this is done. While you can always mail a check along with your return to this address:

PO Box 14555

Salem OR 97309-0940

It’s probably to electronically file online. There are a few different ways you can pay:

If you’re confused about how to pay your Oregon state taxes, or you’re worried that you may be in over your head, remember that a CTax representative is always happy to help.

Now that you’ve made it through all the grueling tax info collected above, it’s time to reward yourself with some fascinating Oregon Tax Facts! Check them out in the graphic below.

Of course, state taxes are not the end of the story; you’re also responsible for your federal taxes every year. Tax brackets and rules are different at the federal level than at the state level, so if you’re having any trouble navigating the complicated waters of taxation, reach out to a Community Tax representative!

This information is accurate as of 2019. Special circumstances that can affect your tax return may apply.

Sources:

Oregon Department of Revenue, Individuals; Tax-Brackets.org, Oregon Taxable Brackets; Tax Policy Center, Briefing Book, Tax-Rates.org, Oregon Property Taxes 2020; Tax Foundation, Excise Taxes, IRS.gov, Earned Income Tax Credit.