About the Statewide Transit Tax
The 2017 Oregon Legislature passed House Bill (HB) 2017, which included the new Statewide Transit Tax. Parts of HB 2017 related to the Statewide Transit Tax were amended in the 2018 session.
On July 1, 2018, employers began withholding the tax (one-tenth of 1 percent or .001) from:
- Wages of Oregon residents (regardless of where the work is performed).
- Wages of nonresidents who perform services in Oregon.
The Statewide Transit Tax is calculated based on the employee's wages as defined in ORS 316.162. Employees who aren't subject to regular income tax withholding due to high exemptions, wages below the threshold for income tax withholding, or other factors are subject to Statewide Transit Tax withholding.
The definition of "wages" excludes amounts paid to certain types of employees and independent contractors (ORS 316.162). Self-employment income isn't subject to this tax.
This tax isn't related to the Lane or TriMet transit payroll taxes. Transit payroll taxes are imposed on the employer based on the amount of payroll. The Statewide Transit Tax is imposed on the wages of each employee, but the employer is responsible for withholding, reporting, and remitting the Statewide Transit Tax.
Revenue from the Statewide Transit Tax will go into the Statewide Transportation Improvement Fund to finance investments and improvements in public transportation services, except for those involving light rail.
For employers
Oregon employers are responsible for:
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Withholding the tax from employees' wages
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Reporting taxes withheld on a quarterly or annual return
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Remitting taxes withheld quarterly or annually
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Reconciling quarterly or annual reports on the annual reconciliation return
If you don't withhold this tax appropriately or file and pay on time, you may be subject to penalties and interest. We can assess penalties for knowingly failing to deduct and withhold the tax of $250 per employee, up to $25,000 for each tax period, in addition to other penalties and interest authorized by state law.
Oregon residents who perform services outside of Oregon can ask their out-of-state employer to withhold the tax from their wages as a courtesy—similar to income tax withholding. However, we can't require out-of-state employers to do so, as they're outside Oregon's taxing jurisdiction.
Agricultural employers may file returns and make payments for this tax annually, as they do with their income tax withholding.
Returns and payments
There is no minimum threshold for filing the Statewide Transit Tax return. Even if the amount of Statewide Transit Tax withholding is minimal, you still need to file the return and remit the amount of tax withheld each quarter (unless you're an annual filer).
Agricultural employers can report and remit the Statewide Transit Tax on either a quarterly or annual basis. If you're an annual filer, you must remit and report the tax by the last day of the month following the end of the calendar year, or January 31.
Annual reconciliation reports are also due by January 31.
If the due date for your quarterly return and payment or annual report falls on a weekend or holiday, the due date shifts to the next business day.
Forms
Transit tax forms are now available and can be found by going to our forms page and searching for "stt."
Filing options and payments
Starting with first quarter 2023 and forward, the Statewide Transit Tax must be filed on the Form OQ if you are a quarterly filer. You can file returns and detail reports using Frances Online or the paper Form OQ found here.
Do you need to file for 2022 and older? You can still do this by accessing the account through Revenue Online, filing electronic returns. Detail reports can be done manually, or the return information can be imported using this spreadsheet. For more information on how to set up an account, please visit Revenue Online.
Beginning with returns filed in January 2021 businesses and payroll service providers will have the ability to file the Statewide Transit Tax returns in bulk. The Oregon Department of Revenue will utilize a subset of the version 5.2 FSET-standard XML schemas to allow for bulk filing of Form OR-STT1, STT2, and STTA. This process is intended for participants who have technical expertise to create and validate an XML document or are using software that provides this service.
Annual Statewide Transit Tax filers can continue to file through Revenue Online for all years or by paper.