Oregon Income Tax Guide 2026: Rates, Brackets and the Federal Tax Subtraction
This Oregon income tax guide 2026 explains the rates, brackets, standard deduction, and the federal tax subtraction.
Oregon has the highest state income tax burden in the country at middle incomes — and the reason is structural. The 8.75% bracket starts at just $11,400 of taxable income for single filers, the standard deduction is only $2,910, and the top 9.9% rate kicks in at $125,000. A single filer at $75,000 owes $5,725.88 even before Portland-area county taxes.
This guide answers the questions Oregon taxpayers actually ask: the 2026 rates and brackets, the small standard deduction, the $263 exemption credit, the unusual federal-tax subtraction, and what Portland residents pay on top. Run your own numbers with the free Oregon income tax calculator.
What are Oregon’s income tax rates in 2026?
Oregon has four rates in 2026: 4.75%, 6.75%, 8.75%, and 9.9%. Single filers pay 4.75% up to $4,550, 6.75% up to $11,400, 8.75% up to $125,000, and 9.9% above that. Joint and head-of-household brackets are twice as wide, with the top rate starting at $250,000. These are marginal rates: each applies only to the slice inside its bracket.
One quirk matters for planning: the top threshold ($125,000 single) is not inflation-indexed, while the lower thresholds are. Every year, inflation quietly pushes more filers into the 9.9% bracket even if their real income does not rise.
What is Oregon’s standard deduction for 2026?
Oregon’s 2026 standard deduction is $2,910 for single filers and married filing separately, $5,820 for married filing jointly, and $4,685 for head of household. That is roughly a fifth of the 2026 federal standard deduction ($16,100 single, $32,200 joint) — and it is why Oregon taxable income runs far higher than federal taxable income for the same person.
The practical consequence: many Oregonians who take the federal standard deduction still benefit from itemizing on the Oregon return, because mortgage interest, charitable gifts, and medical costs can easily beat $2,910. Oregon lets you itemize on the state return independently of your federal choice, so always run both versions before filing.
What is Oregon’s exemption credit?
Oregon gives a $263 credit per exemption for 2026 — for yourself, your spouse on a joint return, and each dependent — subtracted directly from your tax bill, not from your income. A married couple with two children gets four credits worth $1,052 off their final bill.
The catch is the cliff: the credit disappears entirely when federal AGI exceeds $100,000 for single filers ($200,000 joint). A single filer at $99,000 keeps the $263; at $101,000 it is gone. The Oregon income tax calculator models that cutoff, so check which side of it you fall on before counting on the credit.
Can Oregon taxpayers subtract their federal tax?
Yes, and it is one of the most valuable quirks in American state tax. Oregon lets you subtract federal income tax paid, capped at $8,750 for 2026, before applying the brackets. For a single filer at $75,000, entering $5,000 of federal tax paid cuts the Oregon bill from $5,725.88 to $5,288.38, a $437.50 saving at the 8.75% marginal rate.
The subtraction phases out at higher incomes: single filers lose it entirely at wages of $145,000 ($290,000 joint), and the cap itself is the binding limit for most middle-income filers. You need your completed federal return before you can finalize the Oregon one.
How much Oregon tax do you pay on $75,000?
A single filer earning $75,000 with no dependents and no federal tax subtraction entered owes $5,725.88 for 2026 — an effective rate of 7.63%. Subtract the $2,910 standard deduction for $72,090 of taxable income, apply the brackets ($678.50 at the two lower rates, $5,310.38 at 8.75%), then subtract the $263 exemption credit.
- Gross income: $75,000
- Standard deduction (single): −$2,910
- Oregon taxable income: $72,090
- Tax from brackets: $5,988.88
- Exemption credit: −$263.00
- Total Oregon tax: $5,725.88
- Effective rate: 7.63%
At $100,000 the same filer owes roughly $7,148 with the federal subtraction included, and at $150,000 about $12,805 — both figures reflecting the 9.9% bracket and the lost exemption credit. Enter your federal tax paid in the Oregon income tax calculator for your exact number.
Do Portland residents pay extra local income tax?
Yes, and it is large enough to change the answer. Multnomah County’s Preschool for All tax charges 1.5% on income between $125,000 and $250,000 single (3% above $250,000), and the Metro Supportive Housing Services tax adds 1% above $125,000 single. Joint thresholds are $200,000 and $400,000. With the state rate, a Portland resident can face a marginal rate above 13%.
These county taxes are self-assessed on a separate return, though employers must withhold for employees earning over $200,000. They are not included in the state calculator above — Portland-area readers should add them on top.
How does Oregon compare to California and Washington?
Oregon’s burden at middle incomes exceeds California’s, despite California’s higher top rate — because California’s brackets are wider and its standard deduction larger. At $100,000 single, Oregon charges roughly $7,148 versus about $4,911 in California. Washington charges $0 of income tax, which is why the Portland–Vancouver border is one of the most tax-arbitraged lines in America.
The offset is sales tax: Oregon has none — one of only five states — while Washington’s combined rates can exceed 10% in Seattle. For a household spending $50,000 a year on taxable goods, Washington’s sales tax roughly equals $5,000, closing much of the gap. Compare the full picture with the California income tax calculator and the state income tax calculator hub.
What else do Oregon taxpayers ask?
When is my 2026 Oregon return due?
April 15, 2027. Oregon returns are filed on Form OR-40, and estimated payments are due quarterly if withholding does not cover your liability — relevant for freelancers and anyone with significant non-wage income.
Does Oregon tax capital gains at a lower rate?
No. Capital gains are taxed as ordinary income at up to 9.9%, with no preferential state rate. The federal-tax subtraction does not apply to gains in any special way either.
Can I itemize on Oregon if I take the federal standard deduction?
Yes. Oregon allows you to itemize on the state return independently of your federal choice. Given the small $2,910 standard deduction, itemizing often wins on the Oregon return even when it loses federally.
Does Oregon tax Social Security benefits?
Oregon follows the federal treatment of Social Security benefits, with no additional state exemption. Benefits taxable federally are generally taxable in Oregon.
Estimates only — not tax advice. Verify with the Oregon Department of Revenue or a tax professional.
