Oregon income tax (Portland: sales, credit, how much)

[mommaof3kiddos]

Holy shnikes!!! Income tax in Oregon is insane! Our family is relocating to my husband's hometown of Portland. He found a job in Oregon and I'm in consideration for a job in Vancouver. Can anyone explain in layman's terms the Oregon income tax?? I know that I will have to pay Oregon tax because I'll live in Portland and work in WA. For example if we made 110k as a married couple and have 2 dependents?

[VTHokieFan]

Originally Posted by mommaof3kiddos

Holy shnikes!!! Income tax in Oregon is insane! Our family is relocating to my husband's hometown of Portland. He found a job in Oregon and I'm in consideration for a job in Vancouver. Can anyone explain in layman's terms the Oregon income tax?? I know that I will have to pay Oregon tax because I'll live in Portland and work in WA. For example if we made 110k as a married couple and have 2 dependents?

It's basically just a state income tax like all the others. You will pay income tax because you're a resident of oregon and Washington doesn't have an income tax. Oregons tax law allows credits for income tax paid elsewhere, but because WA doesn't have an income tax, you never get that.

Example: I worked in Connecticut for 2 weeks last year. I paid income tax to CT for those two weeks and didn't have to pay Oregon tax.

The income tax here isn't that bad, it's just the bracket. I paid around 6.7% effective tax rate this year. You get to deduct like 6000 in federal taxes from your return.

Also don't forget you have to pay the arts tax which is really just the perfect compliment to having the worst graduation rates in the country

[urbanlife78]

It is a nice balance for not having to pay any sales tax for anything. I enjoy being able to look at price tags and know how much something will cost me.

[Nell Plotts]

A handy way to see its impact is to do your taxes using tax software and purchase the Oregon tax element. Then run your scenarios. I recommend you price TaxAct, H&R Block, TurboTax software in that order.

My income tax is very modest but then I am a senior with tax exempt income and deductible health care expenses.

Someone mentioned that WA has no income tax, which is true, but they have a lot of taxes that are not deductible on the Federal return. Let me assure you that they will pick your pocket in the big picture not a lot less than Oregon. The winners are the folks who work remotely (W-2 earners) who shop in Oregon and don't buy much in the way of licensed goods such as cars. If you have consulting income they have a killer business & occupations tax on your GROSS.

[ccjarider]

Originally Posted by urbanlife78

It is a nice balance for not having to pay any sales tax for anything. I enjoy being able to look at price tags and know how much something will cost me.

Not even close to offsetting the high income tax in OR. Further, generally there is little control over income aside from deferring taxes as much as possible via 401K, IRA etc.

On the other side, people can very much control purchasing options.

Oregon's approach is not wise. But then again, little about how Oregon Gov't operates does.

To OP: If you are a significant bread winner in the family, why not consider living in WA to avoid Income on your contribution to family?

[urbanlife78]

Originally Posted by ccjarider

Not even close to offsetting the high income tax in OR. Further, generally there is little control over income aside from deferring taxes as much as possible via 401K, IRA etc.

On the other side, people can very much control purchasing options.

Oregon's approach is not wise. But then again, little about how Oregon Gov't operates does.

To OP: If you are a significant bread winner in the family, why not consider living in WA to avoid Income on your contribution to family?

For you maybe, but for me, I hate being nickeled and dimed by sales tax every purchase I make. I would rather pay a lump sum.

[wanderbygrace]

Originally Posted by urbanlife78

For you maybe, but for me, I hate being nickeled and dimed by sales tax every purchase I make. I would rather pay a lump sum.

If you compare WA's sales tax to OR's income tax, my (conservative) guess is that Oregonians pay FOUR times more in income tax than Washingtonians pay in sales tax each year. Therefore, it would make for horrific financial prudency to want to pay five times more, just to not have to calculate an additional 9% at the cash register. If I had the choice to pay WA's sales tax vs. our income tax, I'd take WA's sales tax in a heartbeat.

[urbanlife78]

Originally Posted by wanderbygrace

If you compare WA's sales tax to OR's income tax, my (conservative) guess is that Oregonians pay FOUR times more in income tax than Washingtonians pay in sales tax each year. Therefore, it would make for horrific financial prudency to want to pay five times more, just to not have to calculate an additional 9% at the cash register. If I had the choice to pay WA's sales tax vs. our income tax, I'd take WA's sales tax in a heartbeat.

From what I have seen, Washington ranges in Sales Tax from 6.5% base to about 9.6% max, with most places sitting around 8% total.

Based on CNN Money, not sure if it is current information or from 2002 because it doesn't clearly specify, but the cost per $1000 is much higher in Washington than it is Oregon.

CNN/Money: Taxes state by state

Over a course of a year, if you spent $10K on random things in the state, that would cost you around $800.

[wanderbygrace]

Originally Posted by urbanlife78

From what I have seen, Washington ranges in Sales Tax from 6.5% base to about 9.6% max, with most places sitting around 8% total.

Based on CNN Money, not sure if it is current information or from 2002 because it doesn't clearly specify, but the cost per $1000 is much higher in Washington than it is Oregon.

CNN/Money: Taxes state by state

Keep in mind that you only spend about 10-20% of your gross income on sales taxable items, whereas the majority of your gross income gets hit with an income tax.

[urbanlife78]

Here is some interesting tax information between the two states.

Washington
Washington | The Institute on Taxation and Economic Policy (ITEP)

Oregon
Oregon | The Institute on Taxation and Economic Policy (ITEP)