Tax year-end is just around the corner this year. If you’ve already filed your return or are about to do so, here are five things to keep in mind regarding Oregon personal taxes.
1. Oregonians are taxed on the things that matter to them
Taxes are crucial to the well-being of our communities. Educating our children, caring for the elderly, and providing for a wide range of other public goods and services are all made possible by the money we pay in taxes.
When it comes to taxes in Oregon, the personal income tax is the most significant. The General Fund & Lottery Funds Budget sometimes referred to as the “state budget,” receives more than 80% of its revenue from this source. Education, health and human services, and public safety make up more than 90% of the state’s budget.
2. The personal income tax in Oregon is somewhat progressive; however, the entire tax structure is not
From Jesus to Adam Smith, most thinkers agree that a fair tax system is one funded by taxation, which means that the government should ask the rich to pay proportionately more than the poor. The term for such a tax scheme is “progressive tax system.”
However, Oregon’s personal income tax is increasing, although moderately. Starting at 4.75 percent, marginal tax rates quickly rise to 6.75 percent and 8.75 percent, reaching a maximum of 9.9 percent as a taxpayer’s income increases. It’s important to remember that the 8.75 percent tax rate isn’t the most expensive. At $18,400 in taxable income (what you have left after all tax deductions and subtractions, but before tax credits), couples filing taxes together are subject to the 8.75 percent tax rate. This rate is in effect until a couple’s taxable income hits $250,000. A family with low income, such as with just $20,000 in taxable income, pays the same tax rate on their last dollar as families with $250,000 in total income.
All state and local taxes, including income taxes, dramatically affect the tax system. It’s no longer advancing. However, taxes in Oregon that aren’t tied to a person’s ability to pay, such as property and sales taxes, are levied on the state’s residents. Property taxes and excise taxes on alcohol, cigarettes, and gasoline are among them. According to Oregon’s tax structure, when all state and local taxes are taken into account, low-income Oregonians pay a higher percentage of their income in taxes than the wealthiest Oregonians do.
3. Some successful businessmen pay a lower tax rate than their staff
Tax equity was wrecked in 2013 when the Oregon government introduced lower rates for some proprietors of “pass-through” businesses, such as partnerships and S corporations, which are taxed at a lower rate than other standard corporations. These businesses don’t pay corporate income taxes. Rather, the business proprietors are responsible for paying their own personal income taxes on the company’s profits. According to a legislative decision, some wealthy business owners now pay lower taxes than their peers who earn the same amount of money. They also pay fewer taxes than their staff.
4. Despite significant corporate profits, the corporate income tax has deteriorated
In the 1970s, companies contributed about 19 percent of Oregon’s total income taxes. In the previous budgetary term, firms paid around 7%. The corporate income tax has dropped in relative terms despite a solid corporate profit environment.
Corporate tax avoidance, in large part, is to blame for the weakening of the corporate income tax. Corporations shift profits offshore and constantly lobby for new tax benefits.
5. When it comes to the tax increase, the minority has the upper hand
A majority of the Oregon legislature is required to create a new tax break for the wealthy or a new tax subsidy for corporations.
However, if you want to increase tax rates on the affluent and large corporations to pay for schools or other essential services, you’ll need the support of three-fifths of each chamber of the legislature. Conversely, a small group of MPs, who are more easily swayed by special interests, can oppose the majority’s decision.
When are you liable to pay personal income tax in Oregon?
If you fall into one of the following groups, you must pay taxes in Oregon:
· Resident: If you lived in Oregon or spent at least 200 days there in the previous tax year, you are considered an Oregon resident.
· Part-Year Resident: If you were in Oregon for a portion of the year, the state would tax all of your income received during that time, as well as any income produced from Oregon-based sources for the remainder of the year.
· Nonresident: If you were outside Oregon for the whole tax year and aren’t a citizen, you owe the state of Oregon tax for income only obtained from Oregon-based sources.
The information above is not meant to be legal advice in any way. If you have a question that is specific to your situation, please schedule an appointment with us to discuss your needs in better detail. If you do need legal advice we also suggest talking directly with an attorney.
Are you looking for a CPA or tax professional to help you with your taxes? We’d love to schedule a consultation to see if we’re the right fit in working together.
