Fillable Printable Oregon Withholding Tax Formulas
Fillable Printable Oregon Withholding Tax Formulas
Oregon Withholding Tax Formulas
150-206-436 (Rev. 12-15)
Oregon
Withholding Tax Formulas
Eective January 1, 2016
To: Oregon employers
The Oregon Withholding Tax Formulas include:
• Things you need to know.
• Phase-out information for high income employees.
• Frequently asked questions.
For more information, call:
(503) 945-8091
or
(503) 378-4988
955 Center Street NE
Salem OR 97301-2555
Withholding Tax Formulas 2 150-206-436 (Rev. 12-15)
Things you need to know
The updated Oregon Withholding Tax Formulas reflect changes to the inflation adjusted amounts (such as exemp-
tion credit, standard deduction, and federal tax subtractions). Employees may notice a change in the amount
of Oregon tax withheld. If your employee wishes to adjust for too much or too little tax withheld, refer them to
publication, Oregon Income Tax Withholding, 150-206-643, available at www.oregon.gov/dor/business to assist
them in completing a W-4 for Oregon purposes. Employees can also fill out a Federal W-4 form and indicate its
for Oregon only.
Legislative changes
House Bill (HB) 3601 (2013) eliminated all personal exemption credits for taxpayers with federal adjusted gross
income of more than $100,000 for single or married filing separately return, or more than $200,000 for married
filing joint or head of household return effective January 1, 2014.
You may be personally liable for withholding taxes
As a corporation officer or employee, you can be held personally responsible for unpaid withholding taxes owed
by the corporation. That’s because Oregon laws Oregon Revised Statutes (ORS) 316.162 and ORS 316.207 make it
possible to transfer the liability for unpaid taxes from the corporation to the responsible officers and employees
when the corporation fails to remit the tax withheld.
Interested in electronic funds transfer (EFT)?
Payments for combined payroll taxes can be made electronically using the Department of Revenue’s electronic
funds transfer (EFT) program. A business must register with the department and indicate the Automated Clear-
ing House payment type (ACH debit or ACH credit) they plan to use before starting payments.
The IRS has changed the rules on the use of the Electronic Federal Tax Payment System (EFTPS) for withholding
payments. Oregon law states that if a business is required to use EFTPS for federal purposes, they must use EFT
for Oregon purposes. If a change to the federal rules affect you and you must begin paying your federal taxes
with EFTPS, then you must pay your Oregon taxes with EFT.
Even though many businesses are required to make their payments this way, employers may volun-
tarily participate in the EFT program. Additional information and registration materials are available
at: www.oregon.gov/dor/e-filing or you may call the EFT help/message line at (503) 947-2017 to receive a
program guide.
Alternative withholding method for supplemental wage payments
Employers may use a 9 percent flat rate to figure withholding on supplemental wages that are paid at a different
time than an employee’s regular payday. Supplemental wages include bonuses, overtime pay, commissions, or
any other form of payment received in addition to the employee’s regular pay.
Have questions? Need help?
General tax information ................ www.oregon.gov/dor
Salem ..........................................................(503) 378-4988
Toll-free from an Oregon prex ........... 1 (800) 356-4222
Asistencia en español:
En Salem o fuera de Oregon ...................(503) 378-4988
Gratis de prejo de Oregon ..................1 (800) 356-4222
TTY (hearing or speech impaired; machine only):
Salem area or outside Oregon ................(503) 945-8617
Toll-free from an Oregon prex ........... 1 (800) 886-7204
Americans with Disabilities Act (ADA): Call one of the help numbers above for information in alternative formats.
Withholding Tax Formulas 3 150-206-436 (Rev. 12-15)
Things you need to know
Must I round withholding amounts to the nearest dollar?
When employers use the percentage method, the tax for the pay period may be rounded to the nearest dollar, but
it’s not required.
When are withholding payments due?
Due dates for paying Oregon withholding tax are the same as due dates for depositing your federal tax liability.
If your federal tax liability is:
Oregon withholding tax
payments are due:
Payrolls paid in:
Quarter 1
January,
February,
March
Quarter 2
April,
May,
June
Quarter 3
July,
August,
September
Quarter 4
October,
November,
December
• Less than $2,500 for the quarter
➛
by the quarterly report due date
Example: If your federal tax liability is $2,300 and your state income tax liability is
$1,500, you deposit quarterly.
• $50,000 or less in the
lookback period*
➛
by the 15th of the month
following payroll
Example: If your federal tax liability is $5,000 and your state income tax liability is
$2,500, you deposit monthly.
• More than $50,000 in
the lookback period*
➛
Semiweekly deposit schedule
If the day falls on a: Then pay taxes by:
Wednes day, Thu r sday,
a nd/or Fr id ay
the following
Wednesday
Saturday, Sunday,
Monday and/or
Tuesday
the following
Friday
Example: If your federal tax liability is $60,000 and your state income tax liability is
$25,000, you deposit semi-weekly.
• $100,000 in a single pay period*
➛
within one banking day
Example: If your federal tax liability is $120,000 and your state income tax liability is
$75,000, you deposit within the next business day.
New business
Per federal rules, all new businesses should deposit monthly until a lookback period
is available; this is the same for the State of Oregon. See Publication 15, Circular E.
* The lookback period is the 12-month period that ended the preceding June 30.
The lookback period for agricultural employers is the calendar year prior to the
calendar year just ended.
When are withholding reports due?
Employers with household employees, or employers who file federal Form 943 for agricultural employment, may
file annual returns, Oregon Form WA, Oregon Agricultural Annual Withholding Tax Return, 150-206-013-1, for agri-
cultural employees and Oregon Employment Form OA for household employees. All other employers must file a
quarterly tax report, Oregon Employment Form OQ.
As long as you are registered as an employer, you must file Form OQ, even if you have no payroll during the reporting period.
Withholding Tax Formulas 4 150-206-436 (Rev. 12-15)
Computer formula
To figure Oregon withholding amounts, you may use the formulas shown below. If you use your own formula, it
must be approved by the Oregon Department of Revenue before use.
To use the formulas, you must figure a “base wage” (BASE) amount. The base is the employee’s wage minus the
federal tax withheld minus standard deduction. The federal tax adjustment in the formula can’t be more than
$6,500 per year in 2016. That’s because Oregon personal income tax law limits the amount of federal income tax
that is subtracted from federal adjusted gross income (AGI). For payroll periods of less than a year, figure the
annual withholding divided by the number of pay periods (see page 5 or 6).
Once you figure the base, use the base in the formulas below to compute your Oregon withholding (WH).
Example 1: A single employee has an annual wage of $15,000 and claims -0- allowance. If the federal withholding
for this employee is $1,440 and standard deduction is $2,155, then the base is $11,405 = ($15,000 – $1,440 – $2,155).
The amount of annual Oregon withholding from the table below would be $986.
WH = $720 + [(BASE – $8,450) x 0.09] – ($195 x allowances)
WH = $720 + [($11,405 – $8,450) x 0.09] – $195 x -0- = $986
You can figure Oregon withholding for this employee as follows:
1. Wage........................................................................................... $15,000
2. Less federal withholding ........................................................ – $1,440
3. Less standard deduction ......................................................... – $2,155
4. BASE .......................................................................................... $11,405
5. Amount of BASE over $8,450 ................................................. $2,955
6. Tax on first $8,450 of BASE ..................................................... $720
7. Tax on excess (0.09 × $2,955) ................................................... $266
8. Total tax from rates (lines 6 + 7) ............................................ $986
9. Less personal exemption credit ($195 × -0-) ......................... – $-0-
10. Net tax to be withheld annually ............................................ $986
Example 2: To figure monthly withholding based on the same information listed above, take the annual “net tax
to be withheld” ($986) and divide by 12 = $82.
For twice a month, take the $986 and divide by 24 = $41.
For every two weeks, take the $986 and divide by 26 = $38.
For weekly, take the $986 and divide by 52 = $19.
For daily, take the $986 and divide by 260 = $4.
Example 3: A single employee earns $132,000 a year and claims four allowances on her federal W-4. Because the
employee makes more than $125,000 annually, the employee’s subtraction for federal withholding is limited.
For example, if the employee’s federal tax withheld is $9,368 for the year, they may only subtract $3,900 of that
amount. Because the single taxpayers adjusted gross income is over $100,000, the personal exemption credits of
four aren’t allowed.
Example 4: A married employee earns $175,000 a year and claims four allowances on his federal W-4 but he is
choosing to withhold at the higher single rate even though he is married. Because his annual income is higher
than $145,000 which is the final step in the phase-out for the single withholding rates, his employer wouldn’t
give any subtraction for federal tax withheld. His employer would also not allow any allowances in the formula
because his income is over $100,000 for a single individual (see above “legislative changes”).
A list of questions and answers about the withholding formula is on page 7.
Withholding Tax Formulas 5 150-206-436 (Rev. 12-15)
Use the formula that matches your payroll
Annual wages up to $50,000—Annual wages formula:
Single with fewer than 3 allowances
BASE = wages – federal tax withheld (not to exceed $6,500) – standard deduction ($2,155[S])
If BASE is:
But
not
At least over
-0- – 3,350 WH = 195 + [BASE × 0.05] – (195 × allowances)
3,350 – 8,450 WH = 363 + [(BASE – 3,350) × 0.07] – (195 × allowances)
8,450 – 50,000 WH = 720 + [(BASE – 8,450) × 0.09] – (195 × allowances)
Single with 3 or more allowances, or married
BASE = wages – federal tax withheld (not to exceed $6,500) – standard deduction ($4,315[M])
If BASE is:
But
not
At least over
-0- – 6,700 WH = 195 + [BASE × 0.05] – (195 × allowances)
6,700 – 16,900 WH = 530 + [(BASE – 6,700) × 0.07] – (195 × allowances)
16,900 – 50,000 WH = 1,244 + [(BASE – 16,900) × 0.09] – (195 × allowances)
Other pay periods
To determine other pay periods, figure the annual formula. Then for:
Monthly ...................... Divide by 12
Twice a month ............ Divide by 24
Every two weeks ....... Divide by 26
Weekly ......................... Divide by 52
Daily ............................ Divide by 260
Withholding Tax Formulas 6 150-206-436 (Rev. 12-15)
Use the formula that matches your payroll
Annual wages of $50,000 or higher—Annual wages formula:
Single with fewer than 3 allowances
—If single and wages are greater than $100,000 then allowances = -0-.
BASE = wages – federal tax withheld (not to exceed [PHASE OUT]) – standard deduction ($2,155[S])
[S] PHASE OUT =
wages ≥ $50,000 and <$125,000 = $6,500
wages ≥ $125,000 and <$130,000 = $5,200
wages ≥ $130,000 and <$135,000 = $3,900
wages ≥ $135,000 and <$140,000 = $2,600
wages ≥ $140,000 and <$145,000 = $1,300
wages ≥ $145,000 = $-0-
If BASE is:
But
not
At least over
41,345 – 125,000 WH = 525 + [(BASE – 8,450) × 0.09)] – (195 × allowances)
125,000 WH = 11,014 + [(BASE – 125,000) × 0.099] – (195 × allowances)
Single with 3 or more allowances, or married
—If single and wages are greater than $100,000 then allowances = -0-.
—If married and wages are greater than $200,000 then allowances = -0-.
BASE = wages – federal tax withheld (not to exceed [PHASE OUT]) – standard deduction ($4,315[M])
[M] PHASE OUT =
wages ≥ $50,000 and <$250,000 = $6,500
wages ≥ $250,000 and <$260,000 = $5,200
wages ≥ $260,000 and <$270,000 = $3,900
wages ≥ $270,000 and <$280,000 = $2,600
wages ≥ $280,000 and <$290,000 = $1,300
wages ≥ $290,000 = $-0-
[S] PHASE OUT =
wages ≥ $50,000 and <$125,000 = $6,500
wages ≥ $125,000 and <$130,000 = $5,200
wages ≥ $130,000 and <$135,000 = $3,900
wages ≥ $135,000 and <$140,000 = $2,600
wages ≥ $140,000 and <$145,000 = $1,300
wages ≥ $145,000 = $-0-
If BASE is:
But
not
At least over
39,185 – 250,000 WH = 1,049 + [(BASE – 16,900) × 0.09] – (195 × allowances)
250,000 WH = 22,028 + [(BASE – 250,000) × 0.099] – (195 × allowances)
Other pay periods
To determine other pay periods, figure the annual formula. Then for:
Monthly ...................... Divide by 12
Twice a month ............ Divide by 24
Every two weeks ....... Divide by 26
Weekly ......................... Divide by 52
Daily ............................ Divide by 260
Withholding Tax Formulas 7 150-206-436 (Rev. 12-15)
Frequently asked questions
about the withholding computer formula
1. Does the federal withholding amount subtracted
include FICA?
No.
2. What standard deduction amount should be
entered for the Oregon formula?
For employees claiming single or head of household
status, use $2,155 divided by the number of pay
periods. For employees claiming married status, use
$4,315 divided by the number of pay periods. For
single employees with three or more allowances,
use $4,315 divided by the number of pay periods.
3. What do you do if the federal tax withholding
exceeds $6,500 on an annual basis?
Use $6,500 (or the phased-out amount for high-
income earners).
4. What phase-out amount for federal tax withheld
should I enter if my employee is married, but
wishes to be withheld at the higher single rate?
Use the single phase-out amounts.
5. What is included in “wages”?
All taxable amounts are included in wages (hourly
wage, salary, bonuses, tips, etc.).
6. What isn’t included in “wages”?
Non-taxable amounts such as pre-tax deductions
for insurance, cafeteria or flex spending plans (sec-
tion 125 plans), retirement plans (section 401k, etc.),
health savings accounts, etc.
7. What phase-out amount should I use if my
employee claims single with three or more
exemptions?
Use the single phase-out amounts. Only use mar-
ried phase-out amounts for employees who check
the “Married” box on the W-4.
8. What is the difference between twice a month and
every two weeks?
The twice-a-month formula (often referred to as
semi-monthly) is based upon 24 pay periods a year.
The every two weeks or biweekly formula is based
upon 26 pay periods a year.
9. Is there a straight percentage method that can be
used instead of the formula?
No. Even though Oregon’s top tax rate is 9.9 per-
cent, employees usually pay less than the highest
rate due to the federal tax subtraction, the standard
deduction, and the personal exemption credit. The
actual percentage they pay depends on a number
of factors.
10. If the withholding amount is negative, what do I
use?
Zero, however, you should check your calculations
to make sure your entries are correct.
11. Does my computer program need to allow for sub-
tracting federal withholding from gross wages?
Yes, up to $6,500 on an annual basis.
12. Is the personal exemption credit subtracted before
or after the other calculations?
After.
13. Is the format of the Oregon withholding formula
similar to that for the federal formula?
Yes; however, the tax brackets and rates are dif-
ferent. In addition, the Oregon formula requires
subtracting the personal exemption credit after the
other calculations.
14. What should I do if my “canned” computer pack-
age can’t use the Oregon withholding formula?
Most of the newer packages are flexible enough
to use the Oregon formula. Usually you need to
answer a menu of questions about items such
as subtracting federal withholding and how to
subtract the personal allowance. Some of the
older packages don’t allow for subtracting federal
withholding or for subtracting the personal credit
allowance after the other calculations. If your pack-
age doesn’t accommodate the Oregon formula, you
should contact the publisher of the package.
15. Do my employees need to adjust their W-4?
Maybe. If your employee feels like the formulas
don’t accurately reflect their tax situation, they
can change their withholding rate by updating the
federal W-4 and writing “For Oregon Only” at the
top. Your employee may go to www.oregon.gov/
dor/business to find more information on Oregon
Income Tax Withholding, 150-206-643.
16. Can employees use different W-4 withholding
information (allowances, etc.) for Oregon with-
holding than they do for federal withholding?
Yes, employees can fill out a different W-4 with
different information for Oregon. They should
indicate the change and write “For Oregon Only”
at the top of the W-4.
