The Basics
What Is the Oregon Statewide Transit Tax?
The Oregon statewide transit tax is a 0.1% payroll tax on employee wages that funds public transportation across the state. The Oregon Legislature created this tax through House Bill 2017 during the 2017 session, and employers began withholding it on July 1, 2018.
The rate is one-tenth of one percent, which equals $1 for every $1,000 of wages earned. Revenue flows into the Statewide Transportation Improvement Fund (STIF), which finances investments in public transportation services throughout Oregon. Light rail projects are excluded from STIF funding under the original legislation.
Unlike most payroll taxes, the statewide transit tax has no wage cap. Every dollar of wages is subject to the 0.1% withholding regardless of how much an employee earns during the year. There is also no minimum wage threshold for withholding to begin — the tax applies from the first dollar of pay.
Paycheck Math
How Is the Statewide Transit Tax Calculated on Your Paycheck?
The calculation is straightforward: multiply your gross wages for the pay period by 0.001 (0.1%). Because there is no wage cap, the rate applies to your entire gross pay every pay period throughout the year. No cutoff kicks in at higher earnings.
- Biweekly paycheck ($2,307.69 gross): $2,307.69 x 0.001 = $2.31 withheld
- Semi-monthly paycheck ($2,500.00 gross): $2,500.00 x 0.001 = $2.50 withheld
- Weekly paycheck ($1,153.85 gross): $1,153.85 x 0.001 = $1.15 withheld
All three examples above assume a $60,000 annual salary. The withholding appears on your pay stub and is reported on your W-2 in Box 14 with the label 'ORSTT W/H' (Oregon Statewide Transit Tax Withholding). The statewide transit tax is separate from Oregon state income tax, federal income tax, Social Security, and Medicare. It is also separate from local transit taxes in the Portland metro area, which have different rates and rules.
Who Pays
Who Must Pay the Oregon Statewide Transit Tax?
The statewide transit tax is an employee-paid tax. Employers do not contribute their own funds. Their role is to withhold the correct amount from each paycheck and remit it to the Oregon Department of Revenue on a quarterly schedule.
Two groups of workers are subject to the tax:
- Oregon residents — on all wages, regardless of where the work is physically performed
- Nonresidents — on wages earned for services performed within Oregon
Employees who are exempt from regular Oregon income tax withholding due to low wages or high exemptions are still subject to the statewide transit tax. This is an important distinction: even workers who owe no state income tax must have the 0.1% transit tax withheld from their pay.
Several categories of workers are not subject to the tax. Self-employed individuals, sole proprietors, and partners whose income passes through a partnership are exempt because they do not receive 'wages' as defined under ORS 316.162. Domestic workers employed in private homes and clergy performing religious duties are also excluded from the tax.
Taxable Wages
What Wages Are Subject to the Statewide Transit Tax?
The tax applies to 'wages' as defined in ORS 316.162, which broadly covers salary, hourly pay, bonuses, commissions, tips, and most forms of cash compensation. The definition of wages excludes amounts paid to certain types of employees and independent contractors.
There is no wage cap on the statewide transit tax. High-income earners pay the 0.1% rate on every dollar of wages through the end of the year with no cutoff. This differs from Social Security tax, which stops withholding once earnings exceed the annual wage base.
Supplemental wages — including bonuses, overtime pay, and retroactive pay increases — are also subject to the 0.1% rate. Employers apply the same 0.001 multiplier to supplemental wages when processing payroll. This is general information, not tax advice.
Employer Filing
How Do Employers Report and Remit the Statewide Transit Tax?
Most employers file and pay the statewide transit tax quarterly on Form OQ, using Frances Online or the paper form. The quarterly due dates are:
| Quarter | Period | Due Date |
|---|---|---|
| Q1 | January - March | April 30 |
| Q2 | April - June | July 31 |
| Q3 | July - September | October 31 |
| Q4 | October - December | January 31 |
When a due date falls on a weekend or Oregon state holiday, the deadline moves to the next business day. There is no minimum threshold for filing: even if the amount withheld is minimal, employers still need to file the return and remit the tax each quarter unless they are annual filers.
Employers whose annual statewide transit tax liability is not expected to exceed $50 may request written authorization from the Department of Revenue to file and pay annually instead of quarterly. Agricultural employers follow a separate schedule under OAR 150-316-0361.
Penalties for noncompliance are significant relative to the small tax amount. The Department of Revenue can assess a penalty of $250 per employee, up to $25,000 for each tax period, on employers who knowingly fail to deduct and withhold the tax. That penalty comes in addition to other penalties and interest authorized by state law.
Statewide Transit Tax on a $60,000 Salary (2026)
| Line item | Amount |
|---|---|
| Annual gross salary | $60,000.00 |
| Statewide transit tax rate (2026) | 0.1% |
| Annual STT ($60,000 x 0.001) | $60.00 |
| Per biweekly paycheck ($60 / 26) | $2.31 |
| Per semi-monthly paycheck ($60 / 24) | $2.50 |
| Per weekly paycheck ($60 / 52) | $1.15 |
How much Oregon statewide transit tax is withheld from a $60,000 annual salary at the 2026 rate of 0.1%, assuming biweekly pay with 26 pay periods.
Remote Workers
Does the Statewide Transit Tax Apply to Remote or Multi-State Workers?
The statewide transit tax follows residency for Oregon residents. If you live in Oregon, your wages are subject to the tax even when you work remotely for an out-of-state employer. Oregon employers must withhold it. An out-of-state employer can withhold it as a courtesy, but the Department of Revenue can't require employers outside Oregon's taxing jurisdiction to do so.
For nonresidents, the tax applies only to wages earned for work performed within Oregon. A Washington resident who commutes to an Oregon office owes the transit tax on those wages, but wages earned while working from home in Washington are not subject to it.
Multi-state workers who split time between Oregon and another state may need to allocate wages. Only the Oregon-sourced portion is subject to the statewide transit tax for nonresidents. Employers handling multi-state payroll should track days worked in each state to calculate the correct withholding amount.
If you move to Oregon mid-year, the transit tax begins applying to all your wages from the date you establish Oregon residency. If you leave Oregon, the residency-based withholding stops once you are no longer an Oregon resident. Oregon residents with wages earned outside Oregon from an employer not doing business in Oregon, whose tax was not withheld, must file a statewide transit tax return and pay the tax by the due date of their Oregon personal income tax return.
Rate Increase
What Is the Status of the Proposed Rate Increase?
During a 2025 special session, the Oregon Legislature passed House Bill 3991, which amended ORS 320.550 to double the statewide transit tax rate from 0.1% to 0.2% effective January 1, 2026. The increase was part of a broader transportation funding package intended to direct additional revenue into public transit operations statewide.
After the special session, petitioners collected signatures under Initiative Petition 302 to refer HB 3991 to voters. The petitioners submitted their signatures to the Oregon Secretary of State on December 12, 2025. While the signatures were being verified, the Oregon Department of Revenue paused implementation of the rate increase and instructed employers to continue withholding at the original 0.1% rate. If the referral qualifies for the ballot, the pause continues until voters decide the outcome.
As a result, employers are currently withholding the statewide transit tax at 0.001 (0.1%) per the Department of Revenue guidance issued on December 15, 2025. The status of the rate increase depends on whether the referral reaches the ballot and, if so, how voters decide. Check the Oregon DOR Statewide Transit Tax page for the most current rate and any updates to the withholding instructions.
W-2 and Tax Return
How Does the Statewide Transit Tax Appear on Your W-2 and Tax Return?
Employers report statewide transit tax withholding in Box 14 of Form W-2 using the label 'ORSTT W/H.' Box 14 is reserved for informational items that do not have a dedicated box elsewhere on the form. Oregon's W-2 reporting rule, OAR 150-316-0359, requires that designation, so check with your payroll department if you do not see it.
If you itemize deductions on your federal return, ask a tax professional whether the transit tax withheld can be included with your state and local taxes. The amount is relatively small for most workers — $60 per year on a $60,000 salary — so it rarely shifts the itemizing calculus on its own.
If your employer did not withhold the tax (for example, you are an Oregon resident working for an out-of-state employer not doing business in Oregon), you must file a statewide transit tax return and pay the tax yourself. Calculate the amount by adding the wages in Box 16 of all your Forms W-2 and multiplying the total by 0.001. The return and payment are due by your personal income tax return due date.
Questions
Oregon Statewide Transit Tax: What Employees Pay and How It Works FAQ
Is self-employment income subject to the Oregon statewide transit tax?
No. Self-employed individuals, sole proprietors, and partners in a partnership do not pay the statewide transit tax because they do not receive wages as defined under ORS 316.162. Only workers who receive W-2 wages are subject to the tax. Independent contractors who receive 1099 income are also excluded from this payroll withholding.
Is there a wage cap on the Oregon statewide transit tax?
No. The statewide transit tax applies to all wages with no upper limit. There is no point during the year when withholding stops, regardless of how much an employee earns. This makes it different from Social Security tax, which stops withholding once earnings exceed the annual wage base. The 0.1% rate applies from the first dollar to the last dollar of wages.
Do Oregon residents owe the statewide transit tax on wages earned in another state?
Yes. Oregon residents are subject to the statewide transit tax on all wages regardless of where the work is performed. If your out-of-state employer does not withhold the tax, you must file a statewide transit tax return and pay it yourself by your personal income tax return due date. Add the wages in Box 16 of all your Forms W-2 and multiply by 0.001 to determine the amount owed.
What is the penalty for employers who fail to withhold the statewide transit tax?
The Oregon Department of Revenue can assess a penalty of $250 per employee, up to $25,000 for each tax period, on employers who knowingly fail to deduct and withhold the tax. Other penalties and interest authorized by state law can also apply, including for failing to file and pay on time.
Does the statewide transit tax apply to part-time and seasonal workers?
Yes. The statewide transit tax applies to all W-2 wages with no minimum hours or earnings requirement. Part-time employees, seasonal workers, and temporary staff are all subject to the 0.1% withholding from their first paycheck. Employers must withhold the tax from every employee who receives Oregon-taxable wages.
Can I get a refund if too much statewide transit tax was withheld?
If your employer withheld more than 0.1% of your wages, contact your payroll department to request a correction. Overpayments due to employer error are typically corrected on a subsequent payroll run. Because there is no wage cap, there is no mechanism for excess withholding based on annual earnings — unlike Social Security, where overpayment can occur when working for multiple employers.
Will the Oregon statewide transit tax rate increase in the future?
The rate increase under HB 3991 is currently paused. The 2025 Legislature passed HB 3991 to raise the rate from 0.1% to 0.2%, but petitioners filed Initiative Petition 302 to refer the law to voters. While the referral process is pending, the Oregon Department of Revenue has instructed employers to continue withholding at the 0.1% rate. The final outcome depends on whether the referral qualifies and, if so, the election result. Check the Oregon DOR Statewide Transit Tax page for the current rate.
- Sources: Oregon Department of Revenue — Statewide Transit Tax · Oregon Department of Revenue — Statewide Transit Tax Update (GovDelivery Bulletin) · OAR 150-320-0520 — Statewide Transit Tax: Reporting and Payment Due Dates · Oregon Secretary of State — Statewide Transit Tax Administrative Rules · OAR 150-316-0359 — Withholding: Annual Report by Employer
- Last updated September 10, 2026
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