How Oregon Employers Withhold and Report the 0.1% Statewide Transit Tax

2026-10-14 · RKube Services

Oregon's statewide transit tax is 0.1% of wages, withheld from employees with no wage cap. Who it covers, Form OQ vs OR-STT-A, 2026 due dates and a worked Bend payroll example.

Oregon employers run a lot of lines through payroll: state income tax withholding, unemployment insurance, Paid Leave Oregon, the Workers' Benefit Fund, and in some areas a district transit tax. The statewide transit tax is the smallest of them. It's one-tenth of 1 percent of wages, about $1 on every $1,000. Because it's so small, it's also the one that small employers in Portland and Bend leave off, set up wrong, or skip in a quarter with almost no payroll.

This guide covers who it applies to, how it differs from the TriMet and Lane transit taxes, which return you file it on, the 2026 and early 2027 due dates, and the penalty for not withholding. The rules come from the Oregon Department of Revenue (DOR): its Statewide Transit Tax page, the 2026 Oregon Combined Payroll Tax Report instructions and the Form OR-STT-A instructions.

The rate is still 0.1%

The tax came from House Bill 2017 (2017) and sits in ORS 320.550. Employers started withholding it on July 1, 2018, at 0.001 of wages.

There was a reason to wonder about the rate this year. On December 30, 2025, the Secretary of State certified Initiative Petition 302, which referred parts of House Bill 3991 to voters as Measure 120 on the May 19, 2026 primary ballot. DOR's page now says Measure 120 did not pass, and employers should keep withholding at one-tenth of 1 percent. The 2026 combined payroll instructions list the same 0.001 rate.

If your payroll software changed the rate in anticipation, check it now.

Whose wages it applies to

DOR says the tax is withheld from:

• Oregon residents' wages, no matter where the work is done.
• Nonresidents' wages for services they perform in Oregon.

So a Vancouver, Washington resident who commutes to an office in Portland is subject to it on the Portland wages. A Bend resident who works remotely for your Oregon company from a cabin in Idaho is subject to it too.

The base is wages as defined in ORS 316.162, the same definition used for Oregon income tax withholding. One difference trips people up: employees who owe no regular Oregon withholding, because of high allowances, low wages or other reasons, still owe the transit tax. Every dollar of their wages is subject. There's no minimum and no wage cap.

What's not covered: self-employment income. Owners who take draws from a sole proprietorship or partnership don't pay it on that income, and payments to independent contractors aren't wages under ORS 316.162.

Out-of-state employers. If you're based elsewhere and have an employee who lives in Oregon, DOR says it can't require you to withhold because you're outside its taxing jurisdiction. The employee can ask you to withhold as a courtesy, the same way they might for income tax. If a nonresident employer that doesn't do business in Oregon doesn't withhold, the employee is responsible for reporting and paying it. An employer that does business in Oregon withholds like any Oregon employer.

It's not the TriMet or Lane tax

Oregon has two district transit taxes and one statewide tax, and they work differently.

The district taxes are an employer cost based on payroll in the district. The statewide tax comes out of the employee's check, though DOR treats the employer as the taxpayer responsible for withholding, filing and paying it. A Portland employer usually deals with both STT and TriMet.

Which return to file it on

Most employers: Form OQ, every quarter. Since the first quarter of 2023, quarterly filers report STT on the Oregon Combined Quarterly Tax Report, Form OQ, filed through Frances Online or on paper. It goes in the STT section: Box 1b for subject wages and Box 2b for tax withheld. Enter 0 in Box 2b if you had subject payroll but no STT to pay. On the Form 132 wage detail, report each employee's STT subject wages (Box 1e) and STT withheld (Box 1f). That's all wages paid in the quarter, even above the UI wage base. Don't leave a box blank for an employee who got paid but didn't work; enter 0.

Annual filers: Form OR-STT-A. This one is narrow. The OR-STT-A instructions say employers who file the annual agricultural withholding return (Form OR-WA) must also report STT annually on Form OR-STT-A. The combined payroll instructions add that agricultural employers who file federal Form 943 may do Oregon withholding yearly on Form OR-WA. DOR's page says agricultural employers can report and pay STT either quarterly or annually. Mail Form OR-STT-A with the employee detail report (Form OR-STT-2) and the voucher (Form OR-STT-V) to DOR in Salem. Annual filers can also file through Revenue Online.

Everyone: the annual reconciliation on Form OR-WR. Form OR-WR reconciles both state withholding and STT. Every employer files it electronically through Revenue Online by January 31 of the next year, even if it's reporting 0.

Filing with no payroll

There's no minimum. DOR's page says that even if STT withholding is tiny, you file the return and pay what you withheld each quarter, unless you're an annual filer.

The OR-STT-A instructions are even more explicit: you file it even if there was no payroll during the period. Enter 0 for subject wages and 0 for tax. The preparer still has to sign and date the return with a phone number, and only numeric entries count as a filed return.

Due dates for 2026 and the 2027 season

Payments for STT, UI, the WBF assessment, TriMet, Lane and Paid Leave are due when the quarterly reports are due. From the 2026 combined payroll instructions, with weekends moved to the next business day:

The third and fourth quarter dates shift because October 31, 2026 is a Saturday and January 31, 2027 is a Sunday.

Annual OR-STT-A filers report and pay by the last day of the month after year end, January 31. Annual reconciliation reports are due by January 31 too. DOR says a due date on a weekend or holiday shifts to the next business day.

Note that STT follows the quarterly report schedule, not your income tax withholding deposit schedule. Oregon withholding deposits follow your federal deposit schedule, which for many employers means monthly or semiweekly.

Here's how it works for a Bend employer

Say you run a small design firm in Bend with four employees and pay $48,000 in total wages in the fourth quarter of 2026. One employee is a part-timer whose wages are low enough that no Oregon income tax is withheld.

• STT on the quarter: 0.001 × $48,000 = $48. That includes the part-timer's wages, since low wages don't exempt anyone.
• Per paycheck: an employee paid $2,500 has $2.50 withheld.
• Where it goes: $48,000 in Box 1b and $48 in Box 2b on Form OQ, with each employee's share in Boxes 1e and 1f on Form 132, filed and paid by February 1, 2027.
• Year end: the year's STT gets reconciled on Form OR-WR, filed electronically by its January 31, 2027 deadline, which shifts to February 1, 2027 under DOR's weekend rule.

If the firm were in Portland inside the TriMet district, it would also owe TriMet tax as an employer cost: 0.008237 × $48,000 = $395.38 for the quarter, and that comes from the business, not the paychecks.

What it costs to get wrong

If you don't withhold properly or don't file and pay on time, DOR says you may owe penalties and interest. The headline penalty is for knowingly failing to deduct and withhold: $250 per employee, up to $25,000 for each tax period, on top of other penalties and interest under state law.

If the tax was simply left out of your payroll setup, fix it before the next check runs and talk to DOR about the quarters you missed. Because the employer is the taxpayer for STT, the shortfall is yours to settle.

Common questions

What is the Oregon statewide transit tax rate for 2026? 0.1% (0.001) of wages. Measure 120 did not pass on May 19, 2026, so the rate is unchanged.

Who pays it? The employee, through withholding. The employer withholds, files and pays it, and DOR treats the employer as the taxpayer.

Is it the same as the TriMet tax? No. TriMet and Lane are employer-paid payroll taxes in their districts. The statewide tax is withheld from employees statewide.

Do I file Form OR-STT-A? Only if you're an annual filer, which mostly means agricultural employers filing Form OR-WA. Quarterly filers report STT on Form OQ.

Do I file if I had no payroll? Yes. Annual filers file OR-STT-A with zeros, and quarterly filers keep filing Form OQ while the account is open. Form OR-WR is required even when reporting 0.

Does it apply to remote workers? It applies to Oregon residents wherever they work and to nonresidents working in Oregon. Out-of-state employers with no Oregon business can't be forced to withhold, but the employee then owes it.

Is self-employment income subject to the OR transit tax? No.

This guide is general information about Oregon statewide transit tax for tax year 2026, as of October 2026, not legal or tax advice for your situation. Confirm your filing method and rates with the Oregon Department of Revenue ([email protected]) before you file.

If your business also owes the Corporate Activity Tax, our Oregon CAT guide covers that return. For payroll setup questions, RKube Services is at (984) 234-7030.