Oregon — Personal Income Tax

Oregon imposes a personal income tax on three categories of individuals: full-year residents, part-year residents, and nonresidents with Oregon-source income.

Full-year residents are taxed on their entire taxable income from all sources, regardless of where earned. Part-year residents are taxed on all income earned while a resident, plus any Oregon-source income earned while a nonresident; the tax is calculated as if they were full-year residents and then prorated. Nonresidents are taxed only on taxable income derived from Oregon sources.

The tax applies for each taxable year and is computed using graduated rates set forth in statute, with brackets adjusted annually for cost-of-living increases.

Source: ORS 316.037

Oregon imposes a graduated personal income tax with four rates: 4.75 percent, 6.75 percent, 8.75 percent, and 9.9 percent. The top rate of 9.9 percent applies to taxable income above $125,000 for single filers and above $250,000 for married couples filing jointly. The tax is imposed on the entire taxable income of residents and on Oregon-source income of nonresidents and part-year residents.

Source: ORS 316.037; Publication OR-17 (2025)

Oregon personal income tax returns must be filed on or before the due date of the corresponding federal return for the tax year. For calendar-year filers, this means April 15 (or the next business day if April 15 falls on a weekend or legal holiday). Oregon automatically grants filing extensions equal in length to federal extensions; if a valid federal extension is obtained, the Oregon filing deadline extends to October 15.

Source: ORS 314.385

Oregon defines "resident" under two statutory tests in ORS 316.027(1)(a). First, an individual domiciled in Oregon is a resident unless they maintain no permanent place of abode in Oregon, do maintain a permanent place of abode elsewhere, and spend not more than 30 days in aggregate in Oregon during the taxable year. Second, an individual not domiciled in Oregon is a resident if they maintain a permanent place of abode in Oregon and spend in the aggregate more than 200 days of the taxable year in the state, unless the individual proves they are in Oregon only for a temporary or transitory purpose.

Source: ORS 316.027

Oregon allows taxpayers to subtract a standard deduction from federal taxable income when calculating Oregon taxable income. The standard deduction operates differently from the federal deduction because Oregon follows a two-step computation: taxpayers first add back their federal standard deduction or itemized deductions to federal taxable income under ORS 316.695(1)(a) and (b), then subtract the larger of their Oregon itemized deductions or an Oregon standard deduction amount set by state law under ORS 316.695(1)(c)(A).

Base standard deduction amounts for tax year 2025

The Oregon standard deduction varies by filing status. For tax year 2025, the amounts published by the Legislative Revenue Office are:

• Single or married filing separately: $2,835
• Married filing jointly or qualifying surviving spouse: $5,670
• Head of household: $4,560

These amounts are adjusted annually for cost-of-living increases. ORS 316.695(1)(c)(B)(ii) requires the Department of Revenue to compute the percentage change in the Consumer Price Index for All Urban Consumers (CPI-U) for the second quarter of the prior calendar year compared to the second quarter 2023 base period, rounded to the nearest $5.

Additional deduction for age or blindness

Taxpayers who are age 65 or older by the end of the tax year, or who are blind, may claim an additional standard deduction under ORS 316.695(7). For tax year 2025, the additional amounts are:

• Single or head of household: $1,200 per qualifying person
• Married filing jointly or qualifying surviving spouse: $1,000 per qualifying person

Both spouses filing jointly may qualify independently. For example, a single taxpayer age 67 would have a total standard deduction of $4,035 ($2,835 base + $1,200 additional). A married couple filing jointly where both spouses are age 65 or older would have a total standard deduction of $7,670 ($5,670 base + $1,000 + $1,000).

Independent Oregon election

Oregon permits taxpayers to choose between the standard deduction and itemized deductions independently of their federal election. A taxpayer who takes the federal standard deduction may itemize on their Oregon return, and vice versa. ORS 316.695(1)(c)(A) requires Oregon to subtract "the larger of (i) the taxpayer's itemized deductions or (ii) a standard deduction," so the computation always uses whichever method yields the larger deduction for Oregon purposes.

Limitations and special rules

The standard deduction is zero in the following cases specified by Oregon Administrative Rule 150-316-0555(2):

• Married persons filing separately, if the spouse itemizes
• Individuals filing a return for a period of less than 12 months on account of a change in annual accounting period
• A partnership

For a dependent who can be claimed on another person's return, OAR 150-316-0555(3)(a) limits the standard deduction to the lesser of (a) the amount allowed to a dependent under Internal Revenue Code section 63(c)(5) for the tax year, or (b) the Oregon standard deduction amount otherwise applicable to the dependent's filing status.

Source: ORS 316.695; OAR 150-316-0555; 2025 Oregon Public Finance: Basic Facts, Legislative Revenue Office (Jan. 21, 2025), p. 12

Oregon taxes nonresidents only on income derived from Oregon sources. ORS 316.127 defines Oregon-source income as the net amount of items of income, gain, loss, and deduction entering into federal adjusted gross income that are derived from or connected with sources in this state, plus applicable Oregon modifications to federal taxable income.

Three categories of Oregon-source income

Under ORS 316.127(2), items of income, gain, loss, and deduction are derived from Oregon sources if attributable to:

• Real or tangible personal property in Oregon — Income from the ownership or disposition of any interest in real property or tangible personal property located in Oregon is taxable to a nonresident, even if the property is not connected with a business carried on in the state. Gain from the sale of Oregon real estate or tangible personal property is Oregon-source income; loss is deductible if it is a business loss or a transaction entered into for profit.

• Business, trade, profession, or occupation carried on in Oregon — Income from a business, trade, profession, or occupation carried on in Oregon is Oregon-source income. If the business is conducted partly within and partly outside Oregon, the portion attributable to Oregon is determined by apportionment and allocation under ORS 314.605 to 314.675.

• Oregon Lottery prizes — Taxable lottery prizes awarded by the Oregon State Lottery (including prizes from multistate lottery associations if the ticket was sold in Oregon) constitute Oregon-source income.

Compensation for personal services

Oregon follows a physical-presence rule for employee compensation. Wages, salaries, and other compensation for personal services are Oregon-source income to the extent the services are performed in Oregon. OAR 150-316-0165 provides allocation methods for employees who work partly in Oregon and partly in other states. Taxable fringe benefits, stock option income, and accrued vacation payouts are allocated using the same ratio applied to the employee's other compensation for the relevant tax year.

Special rule for military compensation and vessel operators

Compensation paid by the United States for Armed Forces service performed by a nonresident does not constitute Oregon-source income under ORS 316.127(7). Similarly, under ORS 316.127(10), compensation paid to licensed vessel pilots or crew members who perform duties in multiple states on vessels operating in navigable waters of more than one state is not Oregon-source income.

Intangible property income — business situs test

Income from intangible personal property (interest, dividends, royalties, gains from disposition of stocks, bonds, and other securities) constitutes Oregon-source income only if the intangible property is employed in a business, trade, profession, or occupation carried on in Oregon, as stated in ORS 316.127(3). OAR 150-316-0171 implements this "business situs" rule: intangible property has an Oregon business situs when used as a capital or current asset in the conduct of the taxpayer's Oregon business and held in that capacity at the time the income arises.

For example, a nonresident's gain from the sale of S corporation stock is generally not Oregon-source income unless the stock has acquired a business situs in Oregon. Interest income received by a nonresident from an installment sale of Oregon property is not Oregon-source income, because the source of the interest is the use of money, not the sale of the property.

Partnership and S corporation income

ORS 316.127(4) provides that a nonresident shareholder's distributive share of S corporation income (or net operating loss) derived from or connected with Oregon sources is Oregon-source income. Partnership income follows the same rule: a nonresident partner's distributive share of partnership income and deductions derived from Oregon sources enters into the partner's Oregon adjusted gross income under ORS 316.127(1)(a)(A).

OAR 150-316-0171(2)(d) clarifies that a nonresident's gain or loss from the sale of a general partnership interest in an Oregon partnership is Oregon-source income. By contrast, gain or loss from the sale of a limited partnership interest or S corporation stock is generally not Oregon-source income unless the interest has acquired a business situs in Oregon.

Source: ORS 316.127; OAR 150-316-0171; OAR 150-316-0165