Work in Oregon, Live in Idaho: How Your Wages Are Taxed

Reciprocity

Do Oregon and Idaho have a tax reciprocity agreement?

No. The two states handle a cross-border commuter the ordinary way: the work state taxes wages earned there, and the home state gives a credit. Oregon's Publication OR-17 names only four states whose residents may claim a credit on an Oregon nonresident return for tax paid at home: Arizona, California, Indiana and Virginia. Idaho is not one of them, so an Idaho resident's relief comes from Idaho, not from Oregon.

Idaho says the same thing from its side. Its 2025 instructions list, as an example of income both states may tax, wages earned in another state that has an income tax, such as Oregon or Utah, while you live in Idaho. Oregon taxes nonresidents only on income from Oregon sources, and that includes pay for services performed in Oregon. Oregon law also requires every employer to withhold income tax from nonresident employees working in Oregon, so expect Oregon tax on your pay stub from the first check.

Returns

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

Most commuters file two state returns for the year:

• Oregon Form OR-40-N. It is for a resident of another state who had income from an Oregon source. For 2025 a single filer must file when Oregon gross income is more than $2,835 ($5,670 for married filing jointly).
• Idaho Form 40. Every Idaho resident who must file a federal return files one, and it reports your total income, Oregon wages included.
• Idaho Form 39R. Part C works out the credit for income tax paid to other states. Include it and a copy of your Oregon return with Form 40.

Finish the Oregon return first. The Idaho credit worksheet needs Oregon's tax after Oregon's own credits, and you only have that figure once Form OR-40-N is done. Idaho also adds a $10 Permanent Building Fund tax on Form 40, line 31, whenever Idaho requires you to file.

If Oregon was the only state you worked in, Oregon's instructions tell you to put all your earnings in the Oregon column. If you split days between the states, the next section applies.

Deadlines differ. Your 2025 Oregon tax was due April 15, 2026, and an Oregon filing extension does not give you more time to pay. Idaho's return is due the same day; Idaho grants an automatic six-month extension to file if you have paid at least 100% of last year's Idaho tax or 80% of this year's by the due date. Idaho doesn't require estimated tax payments, though you can prepay at any time.

Oregon-source pay

How does Oregon decide which of your wages it can tax?

Oregon taxes the income you earned while working in Oregon and does not tax any amount you earned while working outside Oregon. When your W-2 does not separate Oregon wages, Form OR-40-N uses a day count: wages multiplied by days actually worked in Oregon, divided by days actually worked everywhere.

Holidays, vacation days and sick days are not days actually worked, but the pay for them stays in total wages. Oregon's own illustration is an Idaho resident with 260 paid days. After removing 14 vacation, 8 sick and 8 holiday days, she worked 230 days, 138 of them in Oregon, so $30,000 of her $50,000 in wages counted as Oregon income.

Keep a calendar that records where you worked each day. If the Oregon wages on your W-2 do not match the pay you earned for Oregon work, Oregon asks you to get a signed letter from your employer that explains the difference and to keep it with your tax records.

Idaho credit

How does the Idaho credit stop you paying tax twice?

Idaho taxes all compensation you receive while domiciled or residing in Idaho, then subtracts a credit on Form 40, line 21. Form 39R, Part C builds it in steps:

• Line 1: your Idaho tax from Form 40, line 20.
• Lines 2 to 4: income derived in Oregon divided by your Idaho adjusted income from Form 40, line 11.
• Line 5: line 1 multiplied by line 4.
• Line 6: Oregon's tax due from its tax table or rate schedule, minus its income tax credits.
• Line 7: the smaller of lines 5 or 6.

The credit can't exceed the Idaho tax on Form 40, line 20. Oregon's 2025 rate charts run from 4.75% to 9.9%, while Idaho's 2025 rate is 5.3% on taxable income above $4,811 for a single filer, so Oregon's tax on the same wages is usually the larger number. In that case line 5 sets the credit, the Idaho tax on your Oregon wages falls to zero, and the higher Oregon bill is what you actually pay. Idaho has updated its withholding tables for 2026 and still applies 5.3% to separately paid supplemental wages.

Two credits can shrink the bills further. If you owed Oregon tax for 2024 and filed that return, Oregon's kicker gives you 9.863% of your 2024 Oregon tax as a credit on the 2025 Form OR-40-N (line 57). And Idaho gives residents a Food Tax Credit of $155 per person on Form 40, line 43, which can turn a small Idaho balance into a refund.

For 2026, Oregon's published estimates put the top brackets at 8.75% from $11,400 and 9.9% above $125,000 for a single filer, with a $260 personal exemption credit, a $2,900 standard deduction and a federal tax subtraction of up to $8,750. Oregon's 2026 withholding formulas use a slightly different standard deduction, $2,910, so small differences between withholding and the return are normal.

Paycheck

What comes out of an Oregon paycheck for an Idaho resident?

• Oregon income tax. Employers must withhold from all wages nonresident employees earn for services performed in Oregon, unless their Oregon earnings for the year will be less than their standard deduction. Oregon created Form OR-W-4 to set Oregon allowances.
• Statewide transit tax. One-tenth of 1 percent (0.001) of the wages of nonresidents who perform services in Oregon. Measure 120 did not pass in the May 19, 2026 primary, and Oregon tells employers to keep withholding at that rate.
• Paid Leave Oregon. The 2026 contribution rate is 1% of subject wages up to $184,500 per employee. Employees pay 60 percent of the rate, and employers with 25 or more employees pay 40 percent. Paid Leave Oregon can confirm whether your job is covered.

Idaho tax usually does not need to come out of Oregon pay, because the credit tends to absorb the Idaho tax on those wages. Idaho does allow an employer to withhold Idaho income tax on pay an Idaho resident earns in another state, which can help if you also have untaxed side income or a spouse's income that pushes your Idaho bill up.

Example: Idaho resident, every workday in Oregon, $60,000 salary

Single filer using tax year 2025 figures from the Oregon Form OR-40-N instructions and Idaho Form 40 and 39R instructions. The $5,072 federal tax liability is an assumed input. Other credits are ignored, so the result is approximate. If you had 2024 Oregon tax, the 2025 kicker (9.863% of that tax) lowers the Oregon bill further.

Remote days

What if you work from home in Idaho part of the week?

Oregon's guidance for nonresidents is plain: if you don't live in Oregon, it won't tax your wages for work you do at home or some other place outside Oregon. Publication OR-17 adds that nonresident telecommuters who work for an Oregon employer are taxed only on income from work performed in Oregon, including sick pay or other benefits. Under Oregon's own rules, then, a home office in Idaho keeps those days off the Oregon return.

Idaho still taxes the home-office days, as it taxes all your income, and no credit applies to them because Oregon did not tax them. A hybrid schedule therefore lowers your total bill: those days are taxed at Idaho's 5.3% instead of Oregon's higher rates.

The trap is withholding. If payroll keeps withholding Oregon tax on every paycheck, your W-2 will overstate Oregon wages. Use the day-count formula on Form OR-40-N, keep the employer letter, and expect part of the Oregon withholding back as a refund. A new Form OR-W-4 and a note to payroll about your schedule keep the gap small.

A hybrid schedule also changes your deductions. On Form OR-40-N, your standard or itemized deductions, the federal tax subtraction and certain other deductions are multiplied by your Oregon percentage, so fewer Oregon days mean smaller Oregon deductions as well as less Oregon income.

Local taxes

Do Portland-area income taxes apply to an Idaho commuter?

Only above high income thresholds, and only on pay for work done inside the district. The City of Portland Revenue Division runs two regional personal income taxes that reach nonresidents:

• Metro Supportive Housing Services (SHS): 1% on Metro taxable income above $128,000 single or $205,000 joint for 2026; the 2021 to 2025 thresholds were $125,000 and $200,000. Nonresidents file Form MET-40-NP.
• Multnomah County Preschool for All (PFA): 1.5% on Multnomah County taxable income over $125,000 single or $200,000 joint, plus another 1.5% over $250,000 single or $400,000 joint. Nonresidents file Form MC-40-NP.

For both, a nonresident who traveled into the district to perform work owes tax on that work, while pay for work done from a home office under a teleworking arrangement is not taxable. Employers there must withhold for employees earning more than $200,000 a year or who opt in, and the W-2 shows the amounts as METRO or MULT. Portland's separate Arts Tax is charged to Portland residents who meet its age and income tests.

Two 2026 changes are worth noting: from tax year 2026 the threshold for quarterly estimated payments of these taxes rises to $5,000, and the Preschool for All rate is scheduled to increase by 0.8% in 2028.

Moving

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

Both states switch you to part-year forms. Oregon's Form OR-40-P taxes all income earned while you were an Oregon resident plus Oregon-source income while you were a nonresident. Idaho uses Form 43 for part-year residents, 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 follows the calendar. For the months you lived in Idaho and worked in Oregon, Idaho gives the credit on Form 39NR, Part C, and it goes on Form 43, line 43. After a move into Oregon, your Oregon wages are simply resident income, and Oregon's part-year rules in Publication OR-17 decide any credit for income both states taxed while you lived in Oregon.

Oregon also treats you as a resident if you maintain an Oregon residence and spend more than 200 days in the state during the year, so a second home near the job can change your status. Keep dated proof of any move. This is general information, not tax advice.