NOTE: We originally published this post on October 5, 2020. It was updated on November 16 to reflect the results of the election.

Individuals residing or working in the Portland Metropolitan Area (“Metro”) may be subject to new income and payroll taxes. For businesses, income earned within the same areas may also be subject to the new taxes.

The charts below indicate who is subject to a particular tax, when it is slated to take effect (or is proposed to take effect), and the type of income subject to the tax. Additionally, we’ve included information regarding new or renewed property taxes.

Additional Notes on Metro’s Supportive Housing Services Tax

We’ll walk through a specific example of the numbers associated with the Supportive Housing Services tax. Let’s say there’s a married couple filing jointly with annual income of $250,000.

1. Income over $200,000 is subject to the tax. For our hypothetical couple, this means that $50,000 of their annual income is subject.
2. Tax due is 1.00% of subject income. One percent of $50,000 is $500, so our hypothetical couple would pay $500 for the Supportive Housing Services tax.

This resource can help you determine if you or your business fall under the Metro jurisdiction. If you’re a non-resident of the Metro area, only income earned within the jurisdiction is subject to the tax.

Metro plans to require employers to withhold this tax for individuals beginning on January 1, 2021. Effectively, this would be similar to how existing payroll taxes are deducted from your wages. The employer would remit the amount to the appropriate taxing authority.

Metro has stated that they won’t double-tax income from flow-through entities (S-corporation, partnerships, etc.) to an individual. Metro is currently finalzing these rules to regulate the calculation and administration of the new taxes. This page will be updated once that information is available.

In addition to taxes based on income, the residents of the tri-county area will have several new property tax bonds on the ballot in November as well. The below chart outlines a few of the referenda on this ballot.

All 3 of the above property tax measures passed in November 2020. Residents of the jurisdictions listed will see an increase in property tax levies of approximately $1.41 per $1,000 beginning in 2021.

With all of the variables with local Portland taxes, our state & local tax team is ready to assist you and your business to estimate how the newly enacted and potential taxes will affect you. Please feel free to reach out via email to salt@gmco.com.