About the new statewide transit tax
The 2017 Oregon Legislature passed House Bill (HB) 2017, which included the new statewide transit tax. Parts of HB 2017 related to the statewide transit tax were amended in the 2018 session.
On July 1, 2018, employers began withholding the tax (one-tenth of 1 percent or .001) from:
- Wages of Oregon residents (regardless of where the work is performed).
- Wages of nonresidents who perform services in Oregon.
The statewide transit tax is calculated based on the employee's wages as defined in ORS 316.162. Employees who aren't subject to regular income tax withholding due to high exemptions, wages below the threshold for income tax withholding, or other factors are subject to statewide transit tax withholding.
The definition of "wages" excludes amounts paid to certain types of employees and independent contractors (ORS 316.162). Self-employment income isn't subject to this tax.
This tax isn't related to the Lane or TriMet transit payroll taxes. Transit payroll taxes are imposed on the employer based on the amount of payroll. The statewide transit tax is imposed on the wages of each employee, but the employer is responsible for withholding, reporting, and remitting the statewide transit tax.
Revenue from the statewide transit tax will go into the Statewide Transportation Improvement Fund to finance investments and improvements in public transportation services, except for those involving light rail.
For more information, see our frequently asked questions. Enter "statewide transit" in the search bar.
Resources for employers
You can share information about this new tax with your employees through messages on their paystubs. If you issue paper paystubs, try these easy-to-print stuffers in English and in Spanish. For electronic paystubs, consider adding—or asking your payroll service provider to add—the following language:
"Starting July 1, 2018, you'll see a new item on your paystub: the statewide transit tax. The tax is one-tenth of one percent—or $1 per $1,000—and your employer withholds it from your wages. Please note, those exempt from income tax withholding, aren't exempt from withholding for this tax. Visit the Oregon Department of Transportation's website for information about the projects this tax will support: www.oregon.gov/odot. For more information on the tax, go to the Department of Revenue's website at www.oregon.gov/dor."
And for Spanish speakers:
"A partir del 1 de Julio de 2018, usted verá un nuevo elemento en su comprobante de pago: El impuesto estatal de transporte El impuesto es una décima parte del uno por ciento (.001) — o $1 por cada $1,000 — y su empleador lo retendrá de su salario. Tenga en cuenta que las personas exentas de retención de impuestos personales no están exentas de retención para este impuesto. Visite el sitio web del Oregon Department of Transportation para obtener información sobre los proyectos que apoyará este impuesto: www.oregon.gov/odot. Para obtener más información sobre este impuesto, visite el sitio web del Oregon Department of Revenue en www.oregon.gov/dor."
Oregon employers are responsible for:
- Withholding the tax from employees' wages.
- Reporting taxes withheld on a quarterly or annual return.
- Remitting taxes withheld quarterly or annually.
- Reconciling quarterly or annual reports on the annual reconciliation return.
If you don't withhold this tax appropriately or file and pay on time, you may be subject to penalties
and interest. We can assess penalties for knowingly failing to deduct and withhold the tax of $250 per employee, up to $25,000 for each tax period, in addition to other penalties and interest authorized by state law.
Oregon residents who perform services outside of Oregon can ask their out-of-state employer to withhold the tax from their wages as a courtesy—similar to income tax withholding. However, we can't require out-of-state employers to do so, as they're outside Oregon's taxing jurisdiction.
Agricultural employers may file returns and make payments for this tax annually, as they do with their income tax withholding.
Returns and payments
Any tax collected must be held in trust to be remitted and reported to the Department of Revenue on or before the last day of the month following the previous calendar quarter. For example, you need to start withholding this tax on July 1, 2018, so the first quarter you'll report and remit for is third quarter 2018. This quarter ends on September 30, 2018, which means your return and payment are due by October 31, 2018.
There is no minimum threshold for filing the statewide transit tax return. Even if the amount of statewide transit tax withholding is minimal, you still need to file the return and remit the amount of tax withheld each quarter (unless you're an annual filer).
Agricultural employers can report and remit the statewide transit tax on either a quarterly or annual basis. If you're an annual filer, you must remit and report the statewide transit tax by the last day of the month following the end of the calendar year, or January 31.
Annual reconciliation reports are also due by January 31.
If the due date for your quarterly return and payment or annual report falls on a weekend or holiday, the due date shifts to the next business day.
Transit tax forms are available now. You won't use the current income tax withholding forms or payment coupons for this tax.
Filing options and payments
Employers can file returns and detail reports using electronic or paper options. Filing electronic returns and detail reports will require setting up a Revenue Online account. For more information on how to set up an account, please visit Revenue Online. You can pay by cash, check, money order, or EFT. Include the new payment coupon with your check or money order so we can ensure it's applied appropriately.
Cash payments are only accepted at our main office at 955 Center Street NE in Salem. You can walk in and make your payment anytime during normal business hours, or you can call (503) 945-8050 to schedule an appointment.
W-2s and iWire filing
Where does the new statewide transit tax get reported on the Form W-2?
There isn't currently a requirement to report the statewide transit tax on the Form W-2. We're analyzing the impact of adopting an administrative rule that requires statewide transit tax wages and withholding to be reported in Box 14 of the W-2. This prospective rule change would be part of our fall 2018 rulemaking process. The draft rule would be posted on our website for review, and there would be the opportunity for public comment on the potential impacts of this requirement.
How will the new statewide transit tax be reported in iWire?
As with prior years, there are still three separate W-2 filing options (manual entry, spreadsheet import, and bulk file).
Manual entry—There are two new fields: "Statewide Transit Taxable Wages" and "Statewide Transit Tax Withheld." These fields are labeled as "Box 14" in addition to the regular "Other" Box 14 where other information can be entered.
Spreadsheet import—The updated spreadsheet template option has two new columns in the Form W-2 worksheet labeled "Box 14": "Statewide Transit Wage" and "Statewide Transit Withholding."
Bulk file—The updated bulk file specifications are available under "File Specifications" on the iWire information page.
If you are an Oregon resident who only works in Oregon, the statewide transit tax has already been withheld from your pay and you don't need to file Form OR-STI, even if it's not reported on the Form W-2 you received from your employer.
Oregon residents working out of state
If you're an Oregon resident who performs services as an employee outside of Oregon, you can ask your employer to withhold the tax from your wages as a courtesy—similar to income tax withholding. However, we can't require out-of-state employers to do so, as they're outside Oregon's taxing jurisdiction. If you work outside of Oregon and your employer doesn't withhold the tax for you, you're responsible for filing and paying the tax.
If you don't file or pay on time, you may be subject to penalties and interest. Estimated payments are not required. The tax for individuals is due April 15, 2019. See the instructions for Form OR-STI
for more information about individual filing requirements.