What payroll deductions are employers required to withhold?

Payroll Tax Deductions Employers Must Withhold in Oregon

In Oregon, employers have specific payroll tax withholding obligations to ensure compliance with state and federal regulations. Understanding these requirements is essential for accurate payroll processing and reporting.

Mandatory Payroll Deductions for Oregon Employers

• Federal Income Tax Withholding: Employers must withhold federal income tax based on the employee’s Form W-4 and IRS tax tables.
• Social Security and Medicare Taxes (FICA): Employers are required to withhold Social Security tax at 6.2% and Medicare tax at 1.45% from employee wages.
• Oregon State Income Tax Withholding: Oregon employers must withhold state income tax according to the employee’s Form OR-W-4 and Oregon Department of Revenue tax tables.
• Oregon Transit Tax: Employers in certain transit districts must withhold a transit tax, which funds local public transportation.
• Oregon Paid Family and Medical Leave Insurance (PFMLI): As of 2026, employers must withhold employee contributions for Oregon’s PFMLI program unless the employer opts to pay the full premium.

Additional Operational Considerations

• Unemployment Insurance Contributions: While employers pay Oregon unemployment insurance taxes, these are not withheld from employee wages but should be managed in payroll accounting.
• Recordkeeping and Reporting: Maintain accurate records of all withheld amounts and submit timely payroll tax reports to the IRS and Oregon Department of Revenue.
• Employee Classification: Correctly classify workers as employees or independent contractors to apply proper withholding rules.
• Payroll Automation: Utilize payroll software that integrates Oregon-specific tax tables and deduction requirements to reduce errors and streamline compliance.

By adhering to these payroll deduction requirements, Oregon employers can ensure compliance, avoid penalties, and maintain smooth payroll operations.