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Tax Withholding Information
PERS changed the Oregon state tax withholding on retirement benefit payments as of September 1, 2007 (this change did not apply to non-Oregon residents). This change occurred because PERS corrected its withholding formula. Before the correction, an extra $14.04 per month for recipients filing as single or $28.08 for recipients filing as married in the 9 percent state tax bracket (the majority of benefit recipients) was withheld from payments made from January 1, 2007 through August 1, 2007.
The Oregon Department of Revenue changed the “standard deduction” tax formula for 2007 at the beginning of the year. PERS programming was altered for Oregon state tax withholding in light of this new formula. When reviewing the August 1, 2007 cost-of-living adjustments, PERS noticed that its programming did not include all the new formula’s elements and immediately corrected the programming. The proper withholding was reflected in the September 1, 2007 benefit payment.
The amounts withheld prior to September 1, 2007 result in more tax liability being prepaid and the potential for a greater refund when these benefit recipients file 2007 Oregon state income tax returns. If desired, benefit recipients can adjust their tax withholding by submitting a completed W-4P form, available on the PERS website (http://oregon.gov/PERS) in the Forms section. Any such change in withholding elections or amounts will remain in effect until the benefit recipient submits a new W4-P.