Starting a business in Oregon: three local taxes, or none
Two identical consultancies, both Oregon LLCs, both billing $200,000. One is in Eugene and files one state return. The other is in inner Portland and files four: Oregon's, then the City of Portland's at 2.6%, Multnomah County's at 2%, and Metro's at 1% — three local taxes on business income, stacked, and a registration that is compulsory even in a year all three exempt you. Where you put the desk is the biggest tax decision you will make in this state.
Oregon has no sales tax and no local income tax outside the Portland metro area. Those two facts make most of the state genuinely easy to trade in: one income tax return a year to the Department of Revenue, one $100 annual report to the Corporation Division on your anniversary date, and nothing else recurring at all.
Then there is Portland, where three separate local governments tax business income and none of the three is administered by the state. The rest of this page is mostly about that, because it is where the money is — and because the registration requirement catches even the businesses that end up owing nothing.
- Sales tax
- None — nothing to register, collect or file
- Local income tax
- Yes — 5.6% combined in central Portland (2.6% + 2% + 1%)
- State business licence
- Not required statewide
- Workers' comp from
- 1 subject worker
- Formation approved in
- Filed with the Corporation Division through the Oregon Business Registry. Oregon publishes no guaranteed standard turnaround for online filings.
- First 90 days, all in
- $250–$1,200 · $100 of it to the state
Official portals: Oregon Secretary of State — Business Registry · Oregon DOR — Corporate Activity Tax registration (Revenue Online) · City of Portland Revenue Division — business tax registration. Figures checked September 2026; the portal always wins.
2.6% plus 2% plus 1%, on three returns
These are taxes on business income, not on receipts, so a genuinely loss-making year does not produce a bill the way Washington's B&O tax does across the river. But they stack: a business inside all three boundaries is inside all three, and 5.6% of profit is a real number on top of an Oregon income tax that tops out at 9.9%.
| Who levies it | Rate | Exemption |
|---|---|---|
| City of Portland — Business Licence Tax | 2.6% | Gross receipts under $75,000; the city has legislated a rise to $100,000, so check which figure applies to your year |
| Multnomah County — Business Income Tax | 2.0% | Gross receipts under $100,000 |
| Metro — Supportive Housing Services | 1.0% | Metro sets its own filing threshold; the Revenue Division's page is the one that governs |
The returns go to the Revenue Division rather than to the Oregon Department of Revenue, which is why nothing about filing your state return tells the city you exist, and why your accountant may quite reasonably never mention it. If you are inside the boundary, the registration is your job on day one.
No sales tax — and the tax that isn't one
Oregon's absence of sales tax is complete. The Department of Revenue says flatly that there is no general-use sales tax, and the practical effect is total: no permit to apply for, no rate to look up by street address, no exemption certificates to keep, no return to file, no risk of getting the rate wrong on an invoice, no software to buy for it. If you have run a business in Washington or California, the amount of work this removes is startling.
What Oregon does have — and what gets confused with a sales tax — is the Corporate Activity Tax. It is a tax on commercial activity, paid by the business, not collected from the customer. It matters far later than people fear:
Under $750,000 of Oregon commercial activity
Nothing at all. No registration, no return, no tax. Most small businesses live here permanently.
At $750,000 — register within 30 days
The registration obligation starts at $750,000 of Oregon commercial activity, and you have 30 days from crossing it. Missing the registration carries $100 a month, capped at $1,000 a year — a penalty for paperwork, not for tax.
Above $1,000,000 — the tax actually starts
$250 plus 0.57% of taxable commercial activity above $1 million. So the first million is taxed at nothing beyond the flat $250, and the rate only bites on what is over.
The distinction worth holding on to: a sales tax is money you collect from a customer and pass on, and Oregon has none. The CAT is your own money, on your own revenue, above thresholds most businesses will never reach. Across the state line in Washington the equivalent tax starts at the first dollar — which is a real difference, and the reason some businesses on the Columbia sit on the Oregon side.
The costs that arrive with your first employee
One subject worker makes you a subject employer under DCBS rules, so workers' compensation is required from the first hire. Cover comes from private carriers or from SAIF, which competes with them — Oregon is not monopolistic, so your payroll provider's usual carrier can write the policy.
Two Oregon-specific charges ride on top of the premium and neither is a percentage of payroll:
| Charge | 2026 figure | Who pays |
|---|---|---|
| Workers' Benefit Fund assessment | 1.8¢ per hour worked | Per hour or partial hour. The employer pays at least half — 0.9¢ — and may deduct the rest from the worker. |
| Premium assessment | 9.8% of premium | Employer, added on top of whatever the policy costs. |
| Unemployment insurance, new employer | 2.4% | Employer, on the first $56,700 of each employee's wages. |
| Paid Leave Oregon | 1% of subject wages | Up to $184,500 of wages: 60% from the employee, 40% from the employer once you have 25 or more staff. |
A per-hour assessment is unusual enough to be worth noticing when you budget: it does not scale with what you pay someone, so it costs the same on a minimum-wage shift as on a senior one, and it counts partial hours. Washington takes the same approach to the whole workers' comp premium, which is one of the few things the two states have in common.
If you are not in Portland
Then Oregon is, in operating terms, one of the quiet ones. No local income tax anywhere outside the metro area. No sales tax to collect. No general state business licence — Oregon licenses by occupation, so unless your trade has its own board, there is nothing to apply for. The Corporation Division wants $100 a year on your anniversary date and that is the recurring cost. The formation steps and every state's fees are on the hub page.
Which makes the location question sharper than it looks, and it is worth doing the arithmetic honestly rather than emotionally. On $120,000 of business income, being inside all three Portland boundaries is roughly $6,700 a year in local tax that a business in Bend or Eugene does not pay. That is not a reason to avoid Portland — customers, staff and suppliers are worth more than 5.6% — but it is a reason to know the number before you sign a lease, and to check the boundary rather than assume it, because city, county and Metro lines do not coincide.
One practical note for the Columbia border: Vancouver, Washington is fifteen minutes from Portland and has no income tax at all, which people notice. It also has a B&O tax on gross receipts payable in loss-making years, sales tax to register for and collect, and a monopolistic workers' comp fund. The two states are not a straight swap in either direction. Run both sets of numbers against your actual burn before treating the move as an obvious saving.
Common questions
Does Oregon have a sales tax?
No. The Department of Revenue states that Oregon has no general-use sales tax, and there is nothing to register for, no permit, no rate to look up and no return to file. The Corporate Activity Tax is a separate thing — a tax on the business's own commercial activity, not money collected from customers.
What are the three Portland business taxes?
The City of Portland's Business Licence Tax at 2.6%, the Multnomah County Business Income Tax at 2%, and Metro's Supportive Housing Services tax at 1%, all on business income and all filed with the City of Portland's Revenue Division rather than the state. A business inside all three boundaries pays all three, on top of Oregon's own income tax.
Do I have to register in Portland if I am under the exemption threshold?
Yes. Registration with the Revenue Division and the annual filing are both required whether or not you owe anything — the exemption is claimed on a return you actually file. The City exempts gross receipts under $75,000 with a legislated rise to $100,000, and Multnomah County exempts under $100,000, but neither exemption applies to a business that never registered.
When do I have to register for the Corporate Activity Tax?
Within 30 days of reaching $750,000 of Oregon commercial activity in a year. The tax itself only starts above $1 million, at $250 plus 0.57% of the amount over that. Failing to register carries $100 a month, capped at $1,000 a year, so the registration matters even in the band where no tax is due.
When does workers' compensation become compulsory in Oregon?
From one subject worker. Cover comes from private carriers or from SAIF, a competitive state fund — Oregon is not monopolistic. On top of the premium sits a 9.8% premium assessment and the Workers' Benefit Fund at 1.8 cents per hour or partial hour worked in 2026, of which the employer pays at least 0.9 cents and may deduct the remainder from the worker.
What does Paid Leave Oregon cost an employer?
1% of subject wages up to $184,500, split 60% from the employee and 40% from the employer — and the employer share only applies once you have 25 or more staff. Below that, employees still contribute and are still covered.
How long does an Oregon LLC take to be approved?
The Corporation Division does not publish a guaranteed standard turnaround for online filings. Expedited handling is offered, but the current fee could not be confirmed from a state source at this check, so look at the Secretary of State's fee schedule before budgeting for it.
Know which side of the line you're on.
Describe your business and Velofound lays out what Oregon actually asks of you — the Revenue Division registration if it applies, the annual report, the CAT threshold — beside a live website taking card payments into your own account. Free to start.
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