Work in Idaho, Live in Oregon: Who Taxes Your Paycheck

Reciprocity

Do Idaho and Oregon have a tax reciprocity agreement?

No. Neither state exempts the other's residents. Idaho taxes income from Idaho sources even while you do not reside or keep your domicile in Idaho, and compensation for services performed in Idaho is Idaho source income. Oregon taxes full-year residents on income from all sources. The same paycheck is taxed by both states until a credit steps in.

Oregon's Publication OR-17 settles which state gives that credit. Its first example is a full-year Oregon resident with wages from a job in Idaho, who may claim a credit on his Oregon return for taxes paid to Idaho. Only for income taxed by Arizona, California, Indiana or Virginia does Oregon send residents to the other state's nonresident return for the credit, and Idaho is not on that list. So Idaho collects its tax in full, and Oregon reduces its own tax by what you paid to Idaho.

Returns

Which returns do you file when you live in Oregon and work in Idaho?

• Idaho Form 43. Idaho's return for part-year residents and nonresidents. File it if your gross income from Idaho sources is more than $2,500. The form multiplies your deductions (line 37) by your Idaho percentage (line 38), and the tax worksheet applies 5.3% to Idaho taxable income above $4,811 for a single filer.
• Idaho PBF tax. A flat $10 on Form 43, line 52, whenever Idaho requires you to file.
• Oregon Form OR-40. The full-year resident return. Report all wages, Idaho pay included, and claim the credit for income taxes paid to another state on Schedule OR-ASC with credit code 802.

Form 43 has two columns. Column A must carry the same adjusted gross income as your federal Form 1040, line 11, and Column B carries Idaho adjusted gross income; on line 7 the Idaho column includes all work performed in Idaho while a nonresident. If those wages don't match the Idaho amounts on your W-2s, include a schedule or explanation.

Do the Idaho return first and pay what it shows. Oregon allows the credit only if you pay the other state's tax before or at the same time that you file your Oregon return. If you settle an Idaho balance for an earlier year later on, you amend that year's Oregon return to claim the credit.

The $10 PBF tax cannot be counted in the Oregon credit. Publication OR-17 names the Idaho Permanent Building Fund Tax as a tax that doesn't qualify because it isn't based on income.

Oregon credit

How is Oregon's credit for tax paid to Idaho calculated?

For a full-year resident, Publication OR-17 caps the credit at the smallest of three amounts:

• your Oregon tax after all other credits;
• the tax you actually paid to Idaho;
• Formula I: modified AGI taxed by both states, divided by modified AGI, multiplied by your Oregon tax after all other credits.

Modified AGI is federal AGI adjusted by certain Oregon additions and subtractions. The federal tax subtraction is left out of this calculation because it isn't an income item. The credit also covers state income tax only, not city, county or school taxes.

Oregon's 2025 single chart charges $661 plus 8.75% of taxable income over $11,100, rising to 9.9% above $125,000, while Idaho's rate is 5.3%. For a typical commuter the tax actually paid to Idaho is therefore the smallest of the three, and the credit removes only that amount. If only part of your pay was earned in Idaho, the Idaho tax shrinks with your Idaho percentage and the credit shrinks with it, while Oregon's tax on your total income stays the same. The rest of Oregon's tax on the Idaho wages is still owed and shows up as a balance due on Form OR-40.

Withholding

How do you avoid a large Oregon bill at filing time?

Your Idaho employer handles Idaho tax: an out-of-state employer must withhold Idaho income tax for an employee physically working in Idaho, and any employer must withhold once the person earns $1,000 or more in Idaho during the year. Oregon tax is different. Oregon says it can't require withholding for Oregon resident employees when the employer doesn't have employees working in Oregon, although it asks employers to register and withhold as a convenience to the employee. That changes as soon as you do any work in Oregon, including from home: then Oregon withholding is required.

If your employer won't do that, plan on Oregon estimated payments. The Oregon instructions say that in most cases, if you expect your return to show tax of at least $1,000 after credits and withholding, you must make estimated payments. For 2026, Publication OR-17 measures expected withholding against 100 percent of the tax on your full-year 2025 return, 90 percent of your 2026 tax and 90 percent of the tax on 2026 annualized income. Publication OR-ESTIMATE has the due dates and worksheets.

For 2026, Oregon's estimated payments are due April 15, June 15 and September 15, 2026 and January 15, 2027. A resident who owed Oregon tax for 2024 also gets the kicker on the 2025 return: 9.863% of the 2024 Oregon tax, claimed on Form OR-40, line 32.

Transit tax

Does Oregon's statewide transit tax apply to pay earned in Idaho?

Yes. The tax is one-tenth of 1 percent (0.001) of the wages of Oregon residents regardless of where the work is performed. An Idaho employer outside Oregon's taxing jurisdiction can't be required to withhold it, but you can ask for withholding as a courtesy.

When nothing is withheld, the Form OR-40 instructions tell an Oregon resident working for an employer outside the state to see Form OR-STI to report and pay the tax. On $75,000 of wages that is $75. Self-employment income is not subject to it. The rate is unchanged for now: Measure 120, a referral of parts of HB 3991, did not pass in the May 19, 2026 primary, and Oregon tells employers to keep withholding at 0.1%.

Example: Oregon resident, every workday in Idaho, $75,000 salary

Single filer using tax year 2025 figures from Idaho's Form 43 instructions and Oregon's Form OR-40 instructions and Publication OR-17. The $7,949 federal tax liability is an assumed input. Other credits are ignored, so the result is approximate.

Remote days

What if you work from home in Oregon for an Idaho employer?

Idaho sources wages by where the work happens. If you work both in and outside Idaho, you or your employer must compute an Idaho compensation percentage: Idaho work days divided by total work days for that employer, applied to the pay from that job. Count only days you provided personal services; Idaho's tip is that a five-day week all year gives 260 total work days before vacation, holidays and sick leave come off.

Days worked from your Oregon home are not Idaho source income, and Idaho's withholding guide tells out-of-state employers they don't have to withhold Idaho income tax if the employee isn't physically working in Idaho. Oregon taxes those days as your home state, with no Idaho tax to credit against them. A fully remote Oregon resident who never works in Idaho has no Idaho source wages at all, so ask payroll to stop Idaho withholding. Oregon withholding is then not optional: an employer must withhold Oregon tax from all wages paid to Oregon residents working in Oregon, including those who telecommute from home, and must register with Oregon before issuing the first paychecks. Give payroll a Form OR-W-4. Home days inside the TriMet or Lane transit districts can also trigger the employer-paid transit payroll tax. Keep a work-location log that supports your percentage.

Local taxes

Which local Oregon taxes follow you to an Idaho job?

Where you live in Oregon matters here, not where you work. Metro residents owe the Supportive Housing Services tax of 1% on income earned while a resident once Metro taxable income passes the year's threshold: $128,000 single or $205,000 joint for 2026. Multnomah County residents owe the Preschool for All tax: 1.5% over $125,000 single or $200,000 joint, and another 1.5% over $250,000 or $400,000. Portland's Arts Tax changed for tax year 2026: it is now $50 for single filers and $100 for joint filers, and it applies if you lived in Portland for more than 30 days during the year and your Oregon taxable income is over $20,000 single or $40,000 joint. The flat rule for every adult resident applied from 2012 through 2025.

The payroll withholding rule for SHS and PFA is placed on Metro and Multnomah County employers, for employees earning more than $200,000 a year or who opt in. With an Idaho employer, plan to pay these yourself through the City of Portland Revenue Division, which administers both taxes.

From tax year 2026, you must make quarterly estimated payments for these taxes (or have comparable withholding) once the tax passes $5,000, and the Preschool for All rate is scheduled to rise by 0.8% in 2028.

Moving

What if you move between Oregon and Idaho during the year?

You become a part-year resident of both states. Oregon's Form OR-40-P taxes all income earned while you were an Oregon resident plus Oregon-source income after you left. Idaho's Form 43 covers part-year residents too, and you must file if gross income from all sources while a resident plus Idaho sources while a nonresident is more than $2,500.

The credit splits by period. While you lived in Oregon and worked in Idaho, Oregon gives the credit, using the smallest of its resident-period limits; Formula II is not used for that part of the year. Once you live in Idaho and still work there, Oregon has no claim on that pay.

Residency tests matter for long commutes. Oregon counts you as a resident if you maintain an Oregon residence and spend more than 200 days in the state, and Idaho counts you as a resident if you maintain a home in Idaho the entire year and spend more than 270 days there. Keep dated proof of your move. This is general information, not tax advice.