Before the first payroll run
- 1Obtain a federal EIN.
- 2Register with the Oregon Department of Revenue for combined payroll reporting.
- 3Register with the Oregon Employment Department for unemployment insurance.
- 4Obtain workers’ compensation coverage — required for nearly every Oregon employer.
- 5Register with the Portland Revenue Division if any employee works in the Metro district or Multnomah County.
- 6Collect Form W-4 and Oregon Form OR-W-4 from every employee.
- 7Verify each employee’s actual work location, not their mailing address.
Every pay period
| Withhold or pay | Who bears it | Notes |
|---|---|---|
| Federal income tax | Employee | Per Form W-4 |
| Social Security and Medicare | Split | Employer matches |
| FUTA | Employer | Federal unemployment |
| Oregon income tax | Employee | Per Form OR-W-4, for Oregon-work wages |
| Oregon unemployment insurance | Employer | Experience-rated |
| Paid Leave Oregon | Split | Employers under 25 employees are not required to pay the employer share but must still withhold the employee share |
| Statewide transit tax | Employee | All Oregon-work wages, statewide |
| TriMet payroll tax | Employer | Wages for work inside the district |
| Metro SHS withholding | Employee | Above the threshold, for district work |
| Multnomah PFA withholding | Employee | Above the threshold, for county work |
Quarterly and annually
- Federal Form 941 quarterly
- Oregon combined payroll report quarterly
- Federal Form 940 annually
- W-2s to employees and the SSA by 31 January
- Form 1099-NEC to contractors and the IRS by 31 January
- Local tax annual returns
- Workers’ compensation payroll reporting per your insurer’s schedule
Cross-border employees
An employee working from home in Washington for an Oregon employer is generally not performing Oregon work, so Oregon withholding may not apply to those wages. Washington has no income tax withholding, but does have Paid Family and Medical Leave and workers’ compensation obligations of its own. Getting this settled before the first run is far cheaper than unwinding a year of it — see remote work for an Oregon employer.
The annual January review
- 1Confirm new rates and thresholds for every tax on this page — they do not all change on the same schedule.
- 2Re-verify each employee’s work location, particularly anyone who changed pattern.
- 3Check whether any employee has crossed a local threshold.
- 4Confirm your unemployment insurance experience rate.
- 5Review contractor classifications before issuing 1099s.
We have one employee. Does all of this apply?
Nearly all of it. The compliance burden barely scales with headcount, which is why one-employee businesses are the ones most likely to have gaps.
Can payroll software handle the local taxes?
Some do, if configured correctly. The failure mode is a setup that was correct at the time and never revisited when someone moved or changed schedule.
What if we have missed local withholding all year?
It is correctable. The employee owes the tax either way; the employer’s exposure is about the withholding duty, and fixing it promptly is what limits it.
Questions this guide does not answer
Guides are general. Your return is not. An appointment costs less than a wrong assumption.
Written by
Bookkeeper, 25+ years
Katie has kept books for small businesses for more than 25 years — QuickBooks, payroll, AP, AR, reconciliations and monthly reporting.
Reviewed by
Heather Perkins
Enrolled Agent, Oregon Licensed Tax Consultant
Last reviewed
This page is general information about Oregon, Washington and federal tax rules, not advice about your own return. Thresholds and rates change every year. Figures were verified as of August 2026 — check the linked official sources, or talk to us about your situation.