---
title: "Oregon Income Tax: 9.9% Top Rate and the RSU Withholding Gap"
slug: oregon-income-tax
publishedAt: 2026-06-24T12:38:48.000Z
updatedAt: 2026-06-25T06:50:34.902Z
author: "Mike Navarro"
authorSlug: mike-navarro
category: "State Tax"
tags: ["Oregon", "State Tax", "RSU", "ISO", "Equity Compensation", "Tax Brackets"]
excerpt: "Oregon's income tax tops out at 9.9%, and that top rate begins at just $125,000. Its optional 8% supplemental withholding under-withholds RSU income, so equity earners owe Oregon at filing. Here's how the brackets and the gap work."
canonical: https://myequitytax.com/blog/oregon-income-tax
---
Oregon income tax is a four-bracket schedule topping out at 9.9%, and that top rate begins at just $125,000 of taxable income (single), so most equity earners hit it quickly. Oregon's optional 8% flat supplemental withholding under-withholds the 9.9% top rate, leaving roughly 1.9 points of Oregon tax due at filing on RSU income.
Oregon has no sales tax, which leads some new residents to assume it's a low-tax state. For equity earners, the opposite is closer to the truth: Oregon's income tax climbs fast and tops out near 10%, and its RSU withholding tends to fall short of what you actually owe. This guide covers the Oregon income tax brackets, how they hit equity comp, and the withholding gap to plan around.
## Oregon Income Tax Rates and Brackets
Oregon levies a **four-bracket progressive income tax** ([Oregon Department of Revenue](https://www.oregon.gov/dor/programs/individuals/Pages/default.aspx)). Here are the single-filer brackets:
| Taxable Income (Single) | Rate |
|---|---|
| $0 – $4,400 | 4.75% |
| $4,400 – $11,100 | 6.75% |
| $11,100 – $125,000 | 8.75% |
| Over $125,000 | 9.9% |
As Oregon's Department of Revenue summarizes its system:
> "Oregon's personal income tax is progressive, meaning the rate increases as taxable income increases."
>
> — [Oregon Department of Revenue](https://www.oregon.gov/dor/programs/individuals/Pages/default.aspx)
The striking feature for tech employees: the top **9.9%** rate begins at just **$125,000** of taxable income for single filers (**$250,000** for married filing jointly). Unlike California or New Jersey, where the top rate is reserved for millionaires, Oregon's top rate catches ordinary high earners — most equity-comp households clear $125,000 quickly and pay 9.9% on the marginal dollar. Oregon also has **no sales tax**, a modest standard deduction of **$2,835** (single) / **$5,670** (MFJ), and a personal-exemption credit that phases out above $100,000 (single) / $200,000 (MFJ), so it provides no benefit to most equity earners. For where Oregon sits among the states, see our [state income tax guide](/blog/state-income-tax-guide).
## How Oregon Taxes RSUs
Oregon taxes RSU vesting as **ordinary income** at your marginal bracket rate, on the full fair market value at vest — the same amount included in your federal wages ([IRS Publication 525](https://www.irs.gov/publications/p525)). Because the top 9.9% rate starts at $125,000, most of a tech employee's RSU vest is taxed at that top marginal rate.
The chart below shows the federal rate that stacks with the Oregon piece as income climbs.
The takeaway: in Oregon, the state piece on a large vest is effectively a flat 9.9% for most equity earners, since they're already above the $125,000 threshold — a **$150,000** vest carries roughly **$14,850** of Oregon tax at the 9.9% rate, on top of the federal bill. For the vest-by-vest mechanics, see our [Oregon RSU vesting tax breakdown](/blog/or-rsu-vesting-tax) and the general guide to [how RSUs are taxed](/blog/how-are-rsus-taxed).
Here's how a vest taxed at the 9.9% top rate scales for a typical above-threshold earner:
| RSU vest value (at 9.9%) | Oregon tax |
|---|---|
| $50,000 | $4,950 |
| $100,000 | $9,900 |
| $150,000 | $14,850 |
| $300,000 | $29,700 |
Because the 9.9% rate kicks in so low, there's little practical benefit to "staying in a lower bracket" the way there is in New Jersey — most equity earners are firmly in the top band already, so the Oregon piece behaves almost like a flat 9.9% on incremental equity income. That makes it easy to budget but expensive to ignore: nearly ten cents of every equity dollar goes to Oregon, on top of the federal tax on the same dollar.
## Oregon's Supplemental Withholding Gap (8% vs 9.9%)
Here's the Oregon-specific trap: the state offers an **optional 8% flat supplemental withholding rate** for wages paid separately from a regular payday — bonuses, commissions, and RSU vesting ([Oregon DOR Withholding Tax Formulas](https://www.oregon.gov/dor/forms/FormsPubs/withholding-tax-formulas_206-436_2025.pdf)). The problem: **8% sits below the 9.9% top marginal rate** most equity earners actually owe, so the withholding under-collects by roughly **1.9 percentage points** on every dollar of RSU income.
That's a smaller version of the federal [22% withholding gap](/blog/rsu-tax-withholding), but it's the same mechanism: a flat withholding rate that doesn't match your true marginal rate, producing a balance due at filing. On a **$150,000** vest withheld at 8%, Oregon collects **$12,000**, while the tax actually owed at 9.9% is about **$14,850** — a **~$2,850** Oregon shortfall to settle in April. (Note the 8% rate is optional; some employers instead aggregate supplemental wages with regular wages, which can withhold more or less.)
The gap compounds the federal one. A high-earning Oregon tech employee can face *two* under-withheld layers on the same vest: the federal 22% supplemental rate falling short of a 32–37% federal bracket, and the Oregon 8% supplemental rate falling short of the 9.9% state rate. Neither shortfall shows up on a pay stub as a problem — both just quietly accumulate into an April balance. The practical move is to compute both gaps on each vest and either bump withholding or make estimated payments to cover them, rather than discovering the combined shortfall at filing. Because Oregon's threshold is so low, you should generally assume the full 1.9-point state gap applies to every vest dollar.
**Plan for the ~1.9-point Oregon gap.** If your employer uses the 8% supplemental rate on your vests, set aside roughly 1.9% of each vest for Oregon on top of what's withheld, or make estimated payments — otherwise the state shortfall stacks on top of the federal one at filing.
## How Oregon Income Tax Treats ISOs and Capital Gains
Oregon conforms to the federal treatment of incentive stock options, so a qualifying ISO exercise creates **no Oregon ordinary income** at exercise. Like Illinois, Massachusetts, and New Jersey, **Oregon has no separate state alternative minimum tax** — an ISO exercise-and-hold produces only a federal AMT preference. So the ISO exercise decision for an Oregon resident is a federal optimization; Oregon's 9.9% applies only later, when you sell and recognize a gain, or to the ordinary income from an NSO or a disqualifying disposition.
That said, the eventual Oregon bite is larger than in a low-flat-rate state, because the 9.9% applies to the full gain when you sell. An Oregon ISO holder who exercises early, holds for a qualifying disposition, and sells for a large long-term gain still owes Oregon 9.9% on that gain even though the federal rate is the favorable 0/15/20%. So while the *exercise* timing is a purely federal AMT question, the *sale* is where Oregon collects — worth factoring into how big a position you build and when you ultimately diversify out of it.
On capital gains, Oregon taxes them as **ordinary income** at your bracket rate — there's no preferential long-term capital-gains rate at the state level. For most equity earners that means 9.9% on the gain, on top of the federal 0/15/20% long-term rate, with no holding-period discount at the state level.
This is where Oregon's "no sales tax" reputation misleads equity earners. Yes, you save on consumption taxes, but on a large RSU vest or a startup exit, Oregon's income tax takes close to 10% of the gain — often more, in absolute dollars, than any sales-tax savings. For someone with a six- or seven-figure equity year, Oregon behaves like a high-tax state, and the lack of a capital-gains preference means even a patient long-term holder gets no state relief for waiting. Plan around the income tax, not the absence of a sales tax.
The chart places Oregon among the major states. At a top 9.9% rate that kicks in at just $125,000, Oregon is effectively a high-tax state for equity earners — close to [California](/blog/california-income-tax) and [New York](/blog/new-york-income-tax) in practice for a typical tech salary, even though its headline top rate is lower. For the federal AMT mechanics that still apply to ISO exercises, see our [alternative minimum tax](/blog/alternative-minimum-tax) guide.
## Oregon Residency and Relocation
Oregon taxes residents on all income and nonresidents on Oregon-source income. If you move into or out of Oregon mid-year while holding equity, your RSU and option income is generally allocated by where you performed the work during the vesting period — the work-day allocation covered in our guide to [moving states mid-year with equity](/blog/moved-states-mid-year-with-equity). Given Oregon's low top-rate threshold, even a partial-year Oregon allocation can land the sourced slice at 9.9%, so the timing of a move relative to your vest schedule matters. Keep records of your move date and work-day split so a part-year or nonresident return can be filed accurately, and remember that a no-income-tax destination like Washington only shields equity earned *after* the Oregon work-days end.
## Planning Notes for Oregon Tech Employees
Oregon planning centers on the withholding gap and the low top-rate threshold:
- **Assume the 9.9% rate** on most equity income — you're almost certainly above the $125,000 threshold.
- **Cover the supplemental gap** — if your employer withholds at the optional 8% rate, plan for the ~1.9-point Oregon shortfall with [estimated payments](/blog/estimated-taxes-on-rsu-income).
- **Treat ISO timing as federal** — Oregon adds no state AMT, so the exercise decision is a federal one.
- **Expect no capital-gains break** and no sales-tax offset to ease the income-tax bite.
- **Budget ~9.9% of every equity dollar** for Oregon, since you're almost certainly above the top-rate threshold, and set the supplemental-gap reserve aside on each vest.
The recurring Oregon theme is that the headline "no sales tax" hides a genuinely high income tax for equity earners, made worse by a supplemental withholding rate that falls short of the top marginal rate. None of it is exotic — there's no state AMT and no special capital-gains regime — but the combination of a low 9.9% threshold and an 8% supplemental rate means RSU holders should plan for both a predictable 9.9% liability and a recurring under-withholding gap every year they vest.
## Frequently Asked Questions
**What is the Oregon income tax rate?**
Oregon has a four-bracket progressive income tax from 4.75% to 9.9%. The top 9.9% rate begins at $125,000 of taxable income (single) or $250,000 (married filing jointly).
**When does Oregon's top rate apply?**
At just $125,000 of taxable income for single filers and $250,000 for married couples — far lower than the millionaire thresholds in states like California or New Jersey, so most equity earners reach it.
**Does Oregon tax RSUs?**
Yes. RSU vesting is taxed as ordinary income at your marginal rate, which for most equity earners is the top 9.9% rate applied to the full vest value.
**Does Oregon have a state AMT?**
No. Oregon has no separate state alternative minimum tax, so an ISO exercise-and-hold creates only a federal AMT preference — the state collects its 9.9% only when you later sell.