Oregon Blue Book: Government Finance: Taxes

Government Finance: Taxes

Tulips. (Photo courtesy Ray Zweigart)

Personal Income Tax
Oregon residents and nonresidents who earn income in Oregon pay personal income tax. Oregon’s taxable income is the same as federal taxable income, with some adjustments. Tax rates range from 5.0 percent to 9.0 percent of taxable income. Taxable income is total income, less exclusions, and, either the standard or itemized deductions. After deductions and credits, the average effective tax rate is about 5.6 percent of adjusted gross income. Since 1993, the income tax brackets have been indexed to changes in the U.S. Consumer Price Index. The standard deduction is $3,545 on a joint return, $1,770 on single and married filing separate returns, and $2,855 for a head of household return.

The personal income tax is the largest source of state tax revenue.

Business Taxes
Corporations that do, or are authorized to do, business in Oregon pay an excise tax. Corporations not doing or authorized to do business in Oregon but having income from an Oregon source pay income tax. The tax rate is 6.6 percent of Oregon net income. There is a minimum excise tax of $10. The corporate excise and income tax is the second largest source of state tax revenue.

Property Tax
Property tax rates differ across Oregon. The rate depends on the tax rate approved by local voters and the limits established by the Oregon Constitution. Most properties are taxed by a number of districts, such as a city, county, school district, community college, fire district and port. The total tax rate on any particular property is calculated by adding all the local taxing district rates in the area. The total tax rate is then multiplied by the assessed value of the property. The county assessor annually verifies the tax rates and levies submitted by each local taxing district. The county tax collector collects the taxes and distributes the funds to the local districts.

2007-08 Property Taxes Imposed by Type of District

Source: Department of Revenue

Taxable property includes real property, mobile homes and some tangible personal property used by business. The state and each county assessor determine the value of property in each county. Measure 5, which was passed by the voters in November 1990, restricted non-school taxes on any property to $10 per $1,000 of real market value. It restricted school taxes on any property to $5 per $1,000 of real market value.

Measure 50 was passed by the voters in May 1997. Measure 50 added another limit to the Measure 5 limits. Now each property has a real market value and an assessed value. Each taxing district has a fixed, permanent tax rate for operations. Districts may not increase this rate. Voters can approve local option levies for up to five years for operations and up to 10 years or the useful life of capital projects, whichever is less. Local option levies require a “double majority” for approval. Measure 50 established the 1997–98 maximum assessed value as 90 percent of a property’s 1995–96 real market value. In subsequent tax years, the assessed value is limited to 3.0 percent annual growth until it reaches real market value. The assessed value can never exceed real market value. New property is assessed at the average county ratio of assessed to real market value of existing property of the same class. For 2005–06, for all classes of property statewide, total assessed value was about 69 percent of real market value