Oregon Business Taxes for LLCs
Find out what business taxes Oregon LLCs pay — including state income tax, corporate excise tax, the Corporate Activity Tax, and federal pass-through obligations. No sales tax, no franchise tax.
Bizee Editorial Staff
Editorial Team
Oregon LLC tax facts at a glance
Filing fee: $100 (online) / $100 (paper)
Processing time: 1–2 weeks (standard); expedited available
State agency: Oregon Secretary of State
Annual report due: Annually by anniversary date of formation
State tax rate: Personal income tax: 4.75%–9.9%; Corporate excise tax: 6.6%–7.6%; No sales tax; No franchise tax
Oregon LLC tax overview
Oregon LLCs pay several types of taxes: state income tax on profits passed through to members, a minimum corporate excise tax starting at $150, the Corporate Activity Tax (CAT) if revenue exceeds $1 million, and federal self-employment and income taxes. Oregon has no sales tax and no franchise tax.
How Oregon taxes your LLC by default
By default, Oregon LLCs are taxed as pass-through entities. The LLC itself does not pay income tax. Instead, profits flow through to each member's personal tax return, where they're taxed at individual rates. This applies whether your LLC has one member or several.
Pass-through taxation is the default, but it's not the only option. Oregon LLCs can elect to be taxed as an S Corporation or C Corporation, which changes how the business is taxed at both the state and federal level. Most small LLCs stick with the default — but if your profits are growing, it's worth talking to a tax professional about whether an S Corp election makes sense.
Oregon state taxes for LLCs
Oregon LLCs face 3 main state-level taxes: personal income tax on pass-through profits, a minimum corporate excise tax, and the Corporate Activity Tax for larger businesses. Each has its own rate, threshold, and filing requirement.
Oregon personal income tax
Because LLC profits pass through to members, each member pays Oregon personal income tax on their share of the profits. Oregon's income tax rates run from 4.75% to 9.9%, depending on your income level. You'll report this on your Oregon Form OR-40 and can deduct allowable state expenses to reduce what you owe.
Oregon corporate excise tax and minimum tax
Oregon charges a minimum excise tax on LLCs based on Oregon sales. If your LLC has Oregon sales under $500,000, the minimum is $150 per year. The minimum scales up with revenue. LLCs taxed as C Corporations pay the full corporate excise tax rate of 6.6% to 7.6% on taxable income instead of the minimum.
The minimum excise tax catches a lot of new LLC owners off guard — it's due even if your LLC had no profit that year. Budget for it from day one.
Oregon Corporate Activity Tax (CAT)
The Oregon Corporate Activity Tax applies to businesses with Oregon commercial activity above $1 million per year. The rate is $250 plus 0.57% of Oregon commercial activity over $1 million. If your LLC is below that threshold, the CAT does not apply.
The CAT is calculated on gross receipts minus a 35% deduction for labor or cost of goods — not on net profit. That distinction matters if your margins are thin. A tax professional can help you figure out whether your LLC is close to the threshold and how to plan for it.
Federal taxes for Oregon LLCs
Oregon LLC members pay 2 main federal taxes on business income: self-employment tax and federal income tax. Both apply because the LLC's profits pass through directly to members rather than being taxed at the entity level.
Self-employment tax covers Social Security and Medicare contributions — currently 15.3% on net self-employment income up to the Social Security wage base, then 2.9% above it. Federal income tax is applied at your individual rate after deductions. If you expect to owe $1,000 or more in federal taxes for the year, you'll need to pay estimated taxes quarterly.
If your LLC has employees, you'll also handle payroll taxes — withholding federal income tax, Social Security, and Medicare from employee wages, and paying the employer's share of Social Security and Medicare.
Local taxes: Portland and Multnomah County
If your LLC operates in Portland or Multnomah County, you may owe additional local taxes on top of state obligations. Portland has a Business License Tax and a Clean Energy Surcharge. Multnomah County has a Business Income Tax. Both are based on net business income from activity within the jurisdiction.
These local taxes apply regardless of where your LLC is registered — what matters is where you do business. If you have a physical location, employees, or significant sales activity in Portland or Multnomah County, check with a tax professional to figure out your local filing requirements.
Tax elections: S Corp and C Corp
Oregon LLCs can elect to be taxed as an S Corporation or C Corporation, which changes the tax picture at both the state and federal level. Most small LLCs don't need to make an election — the default pass-through treatment works fine. But as profits grow, the math can shift.
S Corporation election
An S Corp election can reduce self-employment tax for LLC members who are actively working in the business. You file IRS Form 2553 to make the federal election, then file Oregon Form OR-20-S for state purposes. Oregon recognizes the federal S Corp election. The trade-off: you must pay yourself a reasonable salary as a W-2 employee, which adds payroll administration.
C Corporation election
A C Corp election subjects your LLC to federal corporate income tax at 21% and Oregon's corporate excise tax of 6.6% to 7.6% on taxable income. Profits distributed to members as dividends are then taxed again at the individual level. This double taxation makes the C Corp election uncommon for small LLCs — it's more relevant for businesses planning to raise outside investment. File IRS Form 8832 to make this election.
FAQ
It depends on your revenue, profit, and how your LLC is taxed. By default, Oregon LLCs don't pay income tax at the entity level — profits pass through to members, who pay Oregon personal income tax at rates from 4.75% to 9.9%. Every LLC also owes a minimum excise tax starting at $150 per year based on Oregon sales.
If your LLC has Oregon commercial activity above $1 million, the Corporate Activity Tax also applies at $250 plus 0.57% of activity over that threshold.
No. Oregon does not have a sales tax. It's one of a handful of states with no statewide sales tax, which means Oregon LLCs don't need to collect or remit sales tax on goods or services sold in the state.
No. Oregon does not have a franchise tax. Unlike states such as California or Texas, Oregon doesn't charge LLCs a flat privilege tax for doing business in the state. The minimum excise tax ($150 for most small LLCs) is separate and based on Oregon sales, not a franchise fee.
The Oregon Corporate Activity Tax is a tax on businesses with Oregon commercial activity above $1 million per year. The rate is $250 plus 0.57% of Oregon commercial activity over $1 million. It applies to most business types, including LLCs, and is calculated on gross receipts minus a 35% deduction for labor or cost of goods — not on net profit.
Yes. Oregon has a state income tax with rates ranging from 4.75% to 9.9%. For LLC members, this applies to their share of the LLC's pass-through profits. Oregon's top rate of 9.9% kicks in at relatively modest income levels compared to other states, so it's worth factoring into your tax planning.
Yes, in most cases. If you expect to owe $1,000 or more in Oregon income tax for the year, you need to pay estimated taxes quarterly to the Oregon Department of Revenue. The same threshold applies at the federal level. Getting behind on estimated payments can mean underpayment penalties, so set aside a portion of each payment you receive throughout the year.
Most small businesses in Oregon are taxed as pass-through entities — meaning the business itself doesn't pay income tax, and profits flow to the owner's personal return. Sole proprietors, single-member LLCs, partnerships, and S Corporations all work this way. Oregon also requires a minimum excise tax starting at $150 for LLCs, regardless of profit. There's no sales tax and no franchise tax.
Oregon LLC members file Oregon Form OR-40 for personal income tax and report business income on their federal return using Schedule C (single-member) or Schedule K-1 (multi-member). The LLC itself files an Oregon informational return if it has multiple members. At the federal level, self-employment tax is reported on Schedule SE. Quarterly estimated payments are due in April, June, September, and January.
