June 25, 2018
Starting July 1, 2018 all Oregon resident employees will be subject to a new withholding tax, due to the passage of House Bill 2017. Employers are required to withhold 0.1% of all subject wages earned, as defined by ORS 316.162, which will be used to fund improvements to public transportation services. The new Oregon Transit Tax applies to all wages earned by Oregon residents, regardless of where work is performed, as well as non-residents who perform work in the State of Oregon.
This is an employee paid tax, however, it is the responsibility of the employer to withhold, report, and remit this tax to the state on a quarterly basis. The withholding requirement applies to pay periods starting on or after July 1, 2018. Therefore, pay periods beginning in June and ending in July (June 25, 2018 – July 6, 2018, for example) would not be subject to the statewide transit tax withholding. Payments are due on the last day of the month following the end of the quarter. Since withholding for this tax will begin July 1st, the beginning of the 3rd quarter, which ends September 30th, the first funds withheld for this tax will be due for remittance on October 31, 2018. Inappropriately withholding, reporting, or remitting this tax can result in a fine to the employer of $250 per employee, up to $25,000 per tax period. .
Download a Transit Tax insert to be included with employee check stubs here.
Also going into effect on July 1, 2018 is Oregon’s annual minimum wage increase which will increase the Standard Rate to $10.75/hour, Portland Metro rate to $12.00/hour, and Nonurban Counties rate to $10.50/hour. The Oregon Bureau of Labor and Industries website provides a Minimum Wage Rate Summary, including a schedule of wage increases over the next four years, as well as a map of which areas are subject to each of the wage designations: Standard, Portland Metro, or Nonurban Counties.
While the previously discussed transit tax withholding allows for employers to begin withholding for pay periods beginning June 1st and after, such is not the case for the minimum wage increase. All hours worked beginning on or after 12:01 A.M. on July 1, 2018 must be paid at the new, increased minimum wage rate.
Please call our office at (541) 388-7888 for more information, or if you have additional questions.
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