Portland local taxes, filed correctly alongside your state return

Why Portland local taxes catch people out

Most tax software handles the federal 1040 and the Oregon OR-40 well. Fewer people realize that living or working in Portland can add up to three more personal returns and a business return, each with its own rules, forms and deadlines. These returns do not ride along with your Oregon return. They go to the City of Portland Revenue Division, which administers the Arts Tax for the City, the Supportive Housing Services taxes for Metro, and the Preschool for All tax for Multnomah County.

The result is that a lot of Portland residents file their federal and state returns on time and then get a letter months later about a local tax they never knew existed. Penalties and interest apply even when the original amount was small.

A CPA who works in Portland every tax season knows these programs well. Tell us what you need and a licensed CPA who works with people like you gets in touch with a clear, fixed quote.

The Portland Arts Tax after the 2026 changes

The Portland Arts Tax, which the Revenue Division now calls the Arts Education Tax, is a City of Portland tax on adult residents. In 2026 the City Council passed Ordinance 192185, which changed the amount and tied it to Oregon taxable income and filing status.

For tax year 2026, with payment due 4/15/2027, the Revenue Division lists the tax at $50 for single, married filing separately, head of household and qualifying surviving spouse filers, and $100 for married couples filing jointly. You are automatically exempt if your Oregon taxable income is at or below $20,000 for single or married filing separately, or $40,000 for joint, head of household and qualifying surviving spouse filers. The old test based on the federal poverty level, used for tax years 2012 through 2025, no longer applies from 2026.

The City says it will adjust the amounts for inflation starting with tax year 2027. Paying late adds a $15 penalty, and an account still unpaid after six months picks up another $20. An Oregon extension extends the time to file the Arts Tax return but not the time to pay.

Metro SHS and Preschool for All personal income taxes

These two taxes only reach higher earners, but they are where the real dollars are. The Metro Supportive Housing Services personal income tax is 1% of Metro taxable income above a threshold. For tax year 2025 the threshold is $125,000 for single filers and $200,000 for joint filers. Starting with tax year 2026, Metro indexes those thresholds for inflation, and the Revenue Division lists $128,000 and $205,000 for 2026.

The Multnomah County Preschool for All tax is 1.5% on Multnomah County taxable income over $125,000 for single filers or $200,000 for joint filers, plus another 1.5% on income over $250,000 single or $400,000 joint. That makes the top PFA rate 3%. The County has also scheduled a 0.8% rate increase for a coming tax year, so a CPA will confirm the current rate when preparing your return.

Residents file Form MET-40 for SHS and Form MC-40 for PFA. Nonresidents and part year residents with Metro or Multnomah County source income use Form MET-40-NP and Form MC-40-NP. If your residency status is the same for both programs, you can file a combined SHS and PFA return through Portland Revenue Online.

Starting in 2022, employers have been required to withhold these taxes for employees who earn $200,000 or more in a calendar year, and others can opt in. Withholding shows up on your W-2 as METRO and MULT. Withholding does not always match what you owe, which is why many high earners still have a balance or a refund to claim.

The combined City of Portland and Multnomah County business tax return

If you run a business, own rental property, or work as an independent contractor in Portland or Multnomah County, you may owe two local business taxes. The City of Portland Business License Tax is 2.6% and the Multnomah County Business Income Tax is 2%. Both are reported on one combined return, which for tax year 2025 was due 4/15/2026.

Small businesses are exempt below certain gross receipts. For tax year 2025, the City exemption applies to gross receipts under $50,000, and the County exemption applies under $100,000. The City threshold rises to $75,000 for tax years beginning in 2026 and to $100,000 for tax years beginning on or after 1/1/2027. When tax is due, the minimum is $100 for each jurisdiction.

An owner compensation deduction helps many small companies. For tax years beginning on or after 1/1/2025, it allows up to 75% of net business income, capped at $160,500 per owner for the City and $158,500 per owner for the County. Getting this deduction right is often the biggest single factor in what a sole proprietor or small partnership owes.

Larger businesses: Metro SHS business tax and the Clean Energy Surcharge

Metro also has a Supportive Housing Services business income tax of 1% of net income apportioned to Metro. It applies only to businesses with more than $5 million in gross receipts. Sole proprietors are not liable for this business tax and owe the Metro personal income tax instead if their income is over the threshold.

The Portland Clean Energy Surcharge is aimed at large retailers. It applies to businesses with at least $500,000 in Portland gross income and $1 billion in total gross income. Most of the small businesses we hear from will never reach it, but growing companies should know it is there.

Deadlines, extensions and quarterly payments

The local personal and business returns are generally due on 4/15, the same day as federal and Oregon returns for calendar year filers. An extension gives you six more months to file, but there is no extension of time to pay. Interest and penalties run on anything unpaid after the original due date.

Quarterly estimated payments can apply too. They are required for a tax when both the current year and prior year liability for that tax reach a set amount. For the City and County business taxes that amount is $1,000. For the SHS and PFA personal taxes it was $1,000 through tax year 2025 and rises to $5,000 starting with tax year 2026, and the Metro SHS business tax also uses $5,000 from tax year 2026. Personal estimates are due 4/15, 6/15, 9/15 and 1/15, while the business tax schedule for calendar year filers ends on 12/15 instead.

Your CPA will look at last year's local returns, your W-2 withholding and your expected income, then tell you whether to make estimates and how much.

Common questions