Oregon Tax Brackets 2026: Rates, Income Thresholds & Deductions

Understanding Oregon's 2026 Income Tax Brackets

Oregon uses a four-bracket progressive income tax system, with rates ranging from 4.75% to a top rate of 9.9%. Unlike many states, Oregon has not regularly adjusted its bracket thresholds for inflation — the $10,000 first-bracket ceiling for single filers has remained essentially unchanged for years, meaning the majority of Oregon taxpayers quickly move into the 6.75% and then 8.75% brackets. For most working Oregonians, the effective state income tax rate lands between 7% and 9%.

Oregon has two tax features that set it apart from virtually every other state. First, it allows residents to deduct a portion of the federal income taxes they paid when calculating Oregon taxable income — up to $7,050 for single filers and $14,100 for married couples. This federal tax subtraction can meaningfully reduce Oregon state tax owed. Second, Oregon has no sales tax at all, which offsets the income tax burden considerably for everyday spending. A family buying $30,000 in goods annually avoids $2,400–3,000 in sales tax compared to living in Washington or California.

This guide covers every Oregon income tax bracket for 2026, walks through worked examples, and explains the deductions and credits available to Oregon residents.

Oregon's 2026 Tax Brackets: Exact Rates and Thresholds

Oregon's four income tax brackets apply to taxable income after deductions. Here are the complete brackets for 2026:

Notice that bracket 1 covers only the first $10,000 for single filers and $17,400 for married couples. Anyone earning above these modest amounts quickly moves into the 6.75% bracket for the bulk of their income, and then into 8.75% above $125,000 single / $250,000 MFJ.

Worked Example: $75,000 Salary (Single Filer)

Let's calculate the Oregon income tax for a single filer earning $75,000 gross:

1. Start with gross income: $75,000
2. Subtract standard deduction: $75,000 − $2,745 = $72,255 Oregon taxable income
3. Apply brackets:
   • 4.75% on first $10,000 = $475.00
   • 6.75% on remaining $62,255 ($10,001–$72,255) = $4,202.21
4. Total Oregon state income tax: $475 + $4,202 = approximately $4,677
5. Effective rate: approximately 6.24% of gross income

Note: if this taxpayer paid significant federal income tax (say $10,000 in federal taxes), they may also be eligible for Oregon's federal tax subtraction, which could reduce their Oregon taxable income further — see the deductions section below.

Worked Example: $200,000 Salary (Single Filer)

1. Gross income: $200,000
2. Subtract standard deduction: $200,000 − $2,745 = $197,255 Oregon taxable income
3. Apply brackets:
   • 4.75% on first $10,000 = $475.00
   • 6.75% on next $115,000 ($10,001–$125,000) = $7,762.50
   • 8.75% on remaining $72,255 ($125,001–$197,255) = $6,322.31
4. Total Oregon state income tax: $475 + $7,763 + $6,322 = approximately $14,560
5. Effective rate: approximately 7.28% of gross income

Oregon does not index its bracket thresholds for inflation. The $10,000 ceiling on the 4.75% bracket and the $125,000 threshold for 8.75% have remained largely unchanged for years, meaning real bracket creep occurs over time as wages rise.

Oregon Deductions and Credits Available in 2026

Standard Deduction

Oregon's standard deduction for 2026 is $2,745 for single filers and $5,495 for married filing jointly. These amounts are inflation-adjusted each year. The standard deduction is modest compared to the federal standard deduction ($14,600 federal single / $29,200 federal MFJ in 2026), so Oregon's deduction provides limited tax relief on its own.

The Federal Tax Subtraction — Oregon's Unique Deduction

One of Oregon's most distinctive tax provisions is the federal tax subtraction: Oregon residents can deduct a portion of the federal income taxes they actually paid during the tax year from their Oregon taxable income. For 2026, the limits are:

• Single filers: up to $7,050 deductible
• Married filing jointly: up to $14,100 deductible

This is significant because it provides automatic relief for Oregonians with substantial federal tax burdens. A single filer who paid $20,000 in federal income tax can subtract $7,050 from their Oregon taxable income, saving approximately $617 in Oregon state tax (at the 8.75% marginal rate). The federal tax subtraction phases out at higher income levels.

Social Security Income

Oregon does not tax Social Security benefits below certain income thresholds, providing meaningful relief for retirees. Oregon's treatment of Social Security is more favorable than many high-income states.

Earned Income Credit

Oregon offers an Earned Income Credit (EIC) equal to 9% of the federal Earned Income Tax Credit. This helps lower-income working Oregonians reduce their state tax burden in line with federal credits they already receive.

Political Contribution Credit

Oregon allows a nonrefundable credit of up to $50 (single) or $100 (joint) for contributions made to Oregon political campaigns. This is a unique state-level credit not available in most other states.

Oregon vs Washington: Why the Comparison Matters

Oregon's southern neighbor California has a top income tax rate of 13.3% — higher than Oregon's 9.9% — while northern neighbor Washington has no income tax at all. For high earners, the Oregon–Washington comparison is one of the most financially meaningful state border decisions in the country. A single filer earning $200,000 who lives in Washington rather than Oregon avoids roughly $14,000–15,000 per year in state income tax. However, Washington's sales tax (approximately 8.6–10.4% in most areas) partially offsets this for residents who spend heavily on taxable goods. For someone spending $50,000 per year on taxable purchases in Washington, the sales tax bill would be around $4,300–5,200 annually — meaningful, but far less than Oregon's income tax differential at high income levels.