Oregon sole proprietors can now elect a reduced personal income tax rate for some pass-through income. Oregon adopted the legislation in a one day special session. The change applies after December 31, 2017.
The rate applies to the sum of a taxpayer’s:
- nonpassive income after reduction for nonpassive losses; and
- business income or loss as a sole proprietor.
Reduced Tax Rates
The reduced tax rate is progressive. The rates and income thresholds are:
- 7% on the first $250,000 of taxable income;
- 7.2% on taxable income over $250,000 but under $500,000;
- 7.6% on taxable income over $500,000 but under $1 million;
- 8% on taxable income over $1 million but under $2.5 million;
- 9% on taxable income over $2.5 million but under $5 million; and
- 9.9% on taxable income over $5 million.
H.B. 4301, Laws 2018, effective 91st day following adjournment of the 2018 special session