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Oregon State Tax

Setting up local taxes for Oregon

Sage 100 Contractor supports for two local taxes that came into effect January 1, 2021:

  • The Supportive Housing Services (SHS) tax. The Portland metro area tax covers parts of Multnomah, Washington, and Clackamas counties. It includes a 1% income tax on personal income that meets certain thresholds, depending on whether the employee files their taxes individually or jointly.

    For more information about this tax, visit Supportive housing services: Addressing homelessness in greater Portland.

  • The Multnomah County Preschool for All (PFA) tax. This Multnomah County tax is a 1.5% tax or a 3% tax on personal income that meets certain thresholds, depending on the level of income and whether the employee files their taxes individually or jointly.

    For more information about this tax, see Preschool for all personal income tax,

There are three basic steps involved in setting up and applying these local taxes. This topic explains how to:

  • Set up three local tax districts: Metro [SHS], Mulnomah [PFA], and a combined district.

  • Set up payroll calculations for the Metro and Multnomah taxes.

  • Apply the local taxes to the employee records of affected employees.

Setting up tax districts

Because the Portland metro area partly overlaps Multnomah County, you might need to set up three separate local tax districts in the 5-3-6 Local Payroll Tax window and three separate payroll tax calculations

  • The Metro SHS tax. This district applies to employees who live in the Metro area, but not in Multnomah County.

  • The Multnomah County PFA tax. This district applies to employees who live in Multnomah County, but not in the Metro area.

  • Combined PFA and SHS tax. This district applies to employees who live in the Metro area that overlaps Multnomah County.

To set up local tax districts:

  1. Open the 5-3-6 Local Payroll Tax window.

  2. Create a local payroll tax district for Metro Supportive Housing Service (SHS) tax using the following values:

    • Enter a number in District# column.

    • In the District Name column, enter a name that contains [SHS]. SHS must be capitalized.

      Example: Metro [SHS]

    • Leave the Resident Rate blank.

    • Leave the Non-Res Rate blank.

    • For the Tax State, enter OR.

    • Leave the Differential blank.

  3. Create a local payroll tax district for Multnomah County Preschool for All (PFA) tax:

    • Enter a number in District# column.

    • In the District Name column, enter a name that contains [PFA]. PFA must be capitalized.

      Example: Multnomah County [PFA]

    • Leave the Resident Rate blank.

    • Leave the Non-Res Rate blank.

    • For the Tax State, enter OR.

    • Leave the Differential blank.

  4. Create a local payroll tax district for combined SHS and PFA taxes:

    • In the District# column, enter a number that is higher than the two localities it is combining.

    • Enter a District Name that includes the two local tax numbers you created in steps 2 and 3, separated by a comma and enclosed in parentheses.

      Example: Multnomah County inside Metro (51,56)

      Important! The District Name must not contain [SHS] or [PFA].

    • Leave the Resident Rate blank.

    • Leave the Non-Res Rate blank.

    • For the Tax State, enter OR.

    • Leave the Differential blank.

Setting up payroll calculations

To set up withholding calculations:

  1. Open the 5-3-1 Payroll Calculations window.

  2. Create the withholding calculation for the Metro SHS tax district using the following values:

    1. Enter a description, referencing Metro SHS.

    2. For the Tax Type, select 13 – Local Income Tax.

    3. For the Calculation Method, accept 17 – Tables.

    4. In the Tax Area section of the window, for the Tax Locale, enter the Metro local payroll tax district that you created earlier.

    5. Clear the Default to new employees option.

    Note: The calculation’s record number does not have to match the tax locality’s number.

  3. Create the withholding calculation for the Multnomah County PFA tax district using the following values:

    1. Enter a description, referencing Multnomah PFA.

    2. For the Tax Type, select 13 – Local Income Tax.

    3. For the Calculation Method, accept 17 – Tables.

    4. In the Tax Area section of the window, for the Tax Locale, enter the Multnomah local payroll tax district that you created earlier.

    5. Clear the Default to new employees option.

    Note: The calculation’s record number does not have to match the tax locality’s number.

Assigning taxes to employees

On the Human Resources tab of the 5-2-1 Employee window, assign these tax districts to affected employees, as follows:

  • For employees who live within the metro region, but not in Multnomah, all wages are subject to the SHS tax. Therefore, you assign the Metro local payroll tax district as the residence locale.

    For employees who live outside the metro region, only wages earned in the Metro district are subject to this tax. You don't need to add the Metro local payroll tax district to the employee record.

  • For employees who live in Multnomah County, but not in the metro region, assign the Multnomah County PFA tax district as the Residence Locale in the employee record.

  • For employees who live in the part of the Multnomah County that overlaps the metro region, assign the combined SHS and PFA tax district as the Residence Locale in the employee record.

Entering additional information for employees who opt in to these local taxes

Depending on their individual tax situations, some employees can opt in or opt out of the tax.

For employees that opt in for a defined amount, on the Calculations tab of the 5-2-1 Employee window, enter the dollar amount per pay period in the Rate column for the Metro SHS and the Multnomah County PFA calculation, as needed.