Beginning on July 1, 2018, employers must start withholding Oregon’s statewide transit tax from the wages of Oregon residents (regardless of where the work is performed); and (2) wages of non-Oregon residents who perform services in Oregon.  The tax is one-tenth of one percent (.001) if the employee’s wages.  While it is not imposed on wages paid to independent contractors, the tax is still imposed on employees who aren’t subject to regular income tax due to high exemptions, or who have wages that are below the threshold for income tax withholding.

Under the new law, Oregon employers are responsible for:

  • Withholding the tax from employees’ wages;
  • Reporting taxes withheld on a quarterly or annual return;
  • Remitting taxes withheld quarterly or annually; and
  • Reconciling quarterly or annual reports on the annual reconciliation return.

Further, employers who don’t withhold the tax appropriately or file and pay on time are subject to penalties up to $250 per employee or $25,000 for each tax period.