Oregon Employee Tax Compliance Updates for 2025–2026: What Employers Need to Know

As Oregon rolls out significant tax and payroll compliance changes for 2025 and 2026, employers—especially those in construction, contracting, and professional employer organizations (PEOs)—must prepare now to stay compliant. New laws, updated withholding rules, expanded transparency requirements, and tax‑compliance certification mandates will impact onboarding, payroll processing, and state-level licensing.

Key Oregon Payroll & Employee Tax Compliance Changes for 2025–2026

1. Updated Oregon Withholding & Deposit Requirements (2025)

For the 2025 tax year, the Oregon Department of Revenue has released updated withholding tax formulas and clarified employer deposit schedules. Employers must follow Oregon’s standard deposit rules:

• Monthly deposits: Required when an employer’s federal tax liability is less than $50,000 in the look-back period.

• Semi-weekly deposits: Required for employers exceeding the $50,000 federal liability threshold.

These Oregon withholding updates also confirm:

• 8% supplemental wage rate applies to bonuses, commissions, and other supplemental income when paid separately.

• Employees claiming exemption from Oregon income tax must renew Form OR‑W-4 annually by February 15.

Employers should review internal payroll systems or coordinate with payroll providers to ensure full compliance for 2025.

2. Oregon Unemployment Insurance Tax Credit (2025–2027)

Under House Bill 2271, Oregon employers may qualify for a new Unemployment Insurance (UI) tax credit during 2025, 2026, and 2027.

This incentive is designed to help employers maintain workforce stability and offset rising UI tax rates. Employers should:

• Assess eligibility criteria early.

• Track staffing levels and reporting requirements.

• Work with tax professionals to capture the full credit benefit.

This is a key advantage for PEOs, construction companies, and employers managing large seasonal or rotating workforces.

3. New Oregon Pay Transparency & Wage‑Statement Rules (Effective January 1, 2026)

One of the most impactful changes is Oregon Senate Bill 906, which significantly expands employer disclosure requirements.

Effective January 1, 2026, employers must provide new hires with a plain‑language pay explanation that includes:

• Pay schedule (hourly, salary, piece rate, commission, bonus structure)

• All deductions and benefit contributions

• Payroll codes and their definitions

• Any allowances or additional pay types

Additionally, employers must:

• Provide this information at the time of hire.

• Issue updated explanations annually by January 1.

• Maintain clear, documented proof of delivery.

This Oregon payroll transparency law applies to all employers and requires significant HR documentation updates. PEOs and multi-state employers should incorporate Oregon-specific pay disclosure templates into onboarding workflows.

4. Oregon Tax Compliance Certificate Requirement (Starting 2026)

Under Oregon Senate Bill 800, any business seeking to:

• Obtain or renew certain state-issued licenses, or

• Enter into contracts with state agencies,

must provide a tax compliance certificate issued by the Oregon Department of Revenue.

This certificate verifies that the employer is:

• Up‑to‑date on state taxes, and

• In good standing with Oregon tax obligations.

For construction contractors and employers working under state or municipal contracts, this requirement could affect project timelines and bid eligibility.

What Businesses Need to Do Now: Oregon Compliance Checklist

To stay ahead of the 2025–2026 Oregon employee tax law changes, employers should begin preparing the following:

✔ Review Oregon Withholding Practices

Ensure withholding formulas, deposit schedules, and supplemental wage rates reflect 2025 updates.

✔ Update Onboarding Documentation Before 2026

Prepare new hire pay‑transparency forms that comply with SB 906.

✔ Plan for Annual Pay‑Disclosure Updates

Set annual reminders for January 1 compliance updates.

✔ Evaluate Eligibility for UI Tax Credits (2025–2027)

This may reduce long‑term unemployment tax costs.

✔ Confirm Oregon Tax Compliance Status

If your business holds Oregon licenses or contracts, ensure you can obtain the 2026 tax compliance certificate.

✔ Review Oregon Employee Handbook Sections

Especially those related to payroll, wage statements, onboarding, and deductions.

✔ Coordinate With Payroll Providers or PEO Partners

Ensure system-level compliance with new Oregon payroll rules.

Why These Oregon Payroll Updates Matter for Employers

These Oregon tax law changes aim to:

• Increase payroll transparency

• Improve employee understanding of pay structures

• Ensure employer tax compliance

• Offer financial relief through UI tax credits

For Oregon employers, timely updates to payroll processes, HR documentation, and internal compliance controls will help reduce penalties, avoid wage‑statement violations, and ensure smooth onboarding of new hires in 2026.