Oregon Withholding Tax Formulas, Tables, and Deposit Rules

Oregon’s 2026 withholding tax formula, published by the Department of Revenue in Publication 150-206-436, calculates each employee’s paycheck deduction in four moves: annualize the wages, subtract federal income tax withheld (up to $8,750, subject to a high-earner phase-out) and the applicable standard deduction to get a base, run that base through four marginal rate brackets, then subtract $263 for each allowance claimed on Form OR-W-4 before dividing by the number of pay periods in the year.¹

What You Need Before You Start

Three inputs come from the employee’s Form OR-W-4, the state-specific withholding certificate that is separate from the federal W-4:²

Filing status (Single, Married, or Head of Household), which selects the standard deduction and bracket set.
Number of allowances, each worth a $263 credit against the calculated tax for 2026.
Any additional flat dollar amount the employee wants withheld on top of the formula result.

Two more inputs come from the pay period itself: the employee’s gross wages and the federal income tax already withheld from that same check. Oregon’s formula subtracts federal withholding from wages before applying state rates, so the federal number has to be in hand before the Oregon calculation can run.¹

If an employee has never turned in an OR-W-4, do not default to zero allowances. Oregon instructs the employer to withhold at a flat 8 percent of gross wages until a completed form arrives.¹

2026 Formula Constants

The Department of Revenue adjusts the formula’s dollar figures every year. The 2026 values are:¹

Standard deduction, Single filer with fewer than three allowances: $2,910.
Standard deduction, Single filer with three or more allowances, or any Married filer: $5,820.
Personal exemption credit: $263 per allowance.
Federal tax subtraction cap: $8,750 per year.

All four are up from 2025, when the personal exemption credit was $256, the single-filer standard deduction was $2,835, and the federal subtraction cap was $8,500.³

Oregon applies four marginal rates to the taxable base after the federal withholding and standard deduction come off: 4.75 percent, 6.75 percent, 8.75 percent, and 9.9 percent. The bracket thresholds vary by filing status and live in the formula tables in Publication 150-206-436. Pull the current year’s publication rather than reusing last year’s numbers, because the thresholds shift each year alongside the deductions.

Federal Subtraction Phase-Out for High Earners

The full $8,750 federal tax subtraction is only available below certain annual wage levels. Above them, it steps down to zero.¹

Single filers get the full subtraction under $125,000. Between $125,000 and $144,999, the subtraction drops in $5,000 wage increments to $7,000, then $5,250, $3,500, and $1,750. At $145,000 and above, no subtraction is allowed.

Married filers get the full subtraction under $250,000. Between $250,000 and $289,999, the subtraction drops in $10,000 wage increments on the same descending scale. At $290,000 and above, no subtraction is allowed.

Manually tracking this across 26 biweekly pay periods for a high-earning employee is where payroll software pays for itself. Getting it wrong either under-withholds (a surprise April bill for the employee) or over-withholds (their money sits with the state until they file).

The Four-Step Percentage Method

Here is the calculation sequence using 2026 figures for a Single filer with fewer than three allowances.¹

Step 1. Find the base wage. Annualize the employee’s gross wages for the pay period. Subtract the federal income tax withheld (capped at $8,750 for the year and reduced by the phase-out if wages are high enough). Subtract the standard deduction that matches the filing status and allowance count. The result is the BASE.

Step 2. Apply the bracket schedule. Run the BASE through Oregon’s four rates. Each slice of income is taxed at that bracket’s rate, and the results add up to a gross annual tax figure.

Step 3. Subtract the personal exemption credit. Multiply $263 by the number of allowances on the OR-W-4. Subtract that product from the gross tax. What remains is the net annual Oregon withholding.

Step 4. Convert to the pay period. Divide the net annual withholding by the number of pay periods in the year: 52 for weekly, 26 for biweekly, 24 for semimonthly, 12 for monthly. Add any extra flat withholding the employee requested on line 2 of the OR-W-4. That figure is what comes off the paycheck.

The Department of Revenue’s own worked example: an employee earning $25,000 a year with $1,000 in federal withholding and zero allowances has a BASE of $21,090 ($25,000 minus $1,000 minus $2,910). Running that through the bracket schedule produces $1,789 in annual Oregon withholding. Rounding the per-period result to the nearest dollar is optional.¹

Wage Bracket Tables as a Shortcut

For employers who would rather look up an amount than run the math, the Department of Revenue publishes wage bracket tables in Publication 150-206-430. The tables list wage ranges down one axis and allowance counts across the other, so the withholding amount sits at the intersection.⁴ The values are rounded to whole dollars but otherwise produce the same result as the percentage method; the tables just pre-run the formula for common wage ranges.

The tables work well for a straightforward payroll with stable pay periods. They are less practical when wages fluctuate significantly from check to check, since each period lands on a different row. Most payroll software runs the percentage method internally regardless.

Supplemental Wages: A Flat Rate Option

Bonuses, overtime, commissions, and other supplemental payments issued on a separate check from regular pay can be withheld at a flat 8 percent instead of being run through the full bracket formula.¹ This avoids the distortion that a one-time bonus creates when annualized as if it were regular wages. If the supplemental amount is combined with regular pay on the same check, the flat rate is not available and the normal formula applies to the combined total.

When to Remit What You Withhold

Calculating the right amount is only half the job; Oregon also dictates when it has to be deposited. Oregon ties its deposit schedule directly to the employer’s federal deposit tier:⁵

Quarterly depositors, whose total federal tax due at quarter-end is under $1,000, remit Oregon tax by the end of the month following the quarter.
Monthly depositors, whose federal liability was $50,000 or less during the lookback period, remit by the 15th of the following month.
Semi-weekly depositors, whose federal liability exceeded $50,000 in the lookback period, remit on a semi-weekly cycle. Wednesday-through-Friday paydays are due the following Wednesday; Saturday-through-Tuesday paydays are due the following Friday.
Next-day depositors, whose federal tax reaches $100,000 or more in any single pay period, remit by the close of the next banking day. Hitting that threshold also pushes the employer to semi-weekly status for the rest of the current calendar year and all of the next.

The lookback period for most employers is the 12 months ending the preceding June 30. Legal holidays between the end of the pay period and the deposit deadline push the due date out by one banking day.⁵ Employers who pay federal payroll taxes electronically must also pay Oregon combined payroll taxes electronically.⁶

1
Oregon Department of Revenue. Oregon Withholding Tax Formulas
2
Oregon Department of Revenue. Form OR-W-4 – Oregon Withholding Statement and Exemption Certificate
3
U.S. Department of the Interior. Tax Changes Implemented Pay Period 2026-04: MI and OR
4
Oregon Department of Revenue. Oregon Withholding Tax Tables
5
Oregon Law. OAR 150-316-0332 – Withholding: Payment Due Dates
6
Oregon Department of Revenue. Withholding and Payroll Tax