Payroll tax info

Payroll Tax

by LaPoint last modified Aug 09, 2011 01:40 PM


TriMet was created by the Oregon Legislature in 1969.  At the time, the legislation gave the district seven options for funding to supplement passenger revenues:

  1. Property tax
  2. General obligation bonds
  3. Revenue bonds
  4. Sales Tax
  5. Business license tax
  6. Personal income tax
  7. Gross payroll tax imposed on all non-governmental employers located within TriMet boundaries

TriMet chose to adopt the payroll tax with the initial rate limit at .6% of gross payrolls. Initial payroll tax rates were:

  • .5%:  1/1/70 –12/13/70
  • .3%:  1/1/71-12/31/74
  • .4%:  1/1/75-12/31/78
  • .5%:  1/1/76-06/30/78
  • .6%:  7/1/78 -1/1/89

In 1981, the Oregon Legislature passed two measures that affected TriMet: 

  • The first granted mass transit districts authority to levy a tax of up to .6% of the net earnings from self-employment of individuals and partnerships within the district.  The tax was first collected in April 1983. 
  • The second granted TriMet the equivalent of .6% of state employee payrolls of employees working in the TriMet service district.  This kicked in in 1981 at a rate of .48%.  The rate has been at the full .6% since 1983. 

In 1987, a state law passed that permits TriMet to increase its payroll/self-employment tax rate within the district if the Board withdraws territory pursuant to filing of a withdrawal petition.   Under this law, TriMet may increase the amount of payroll/self-employment tax in the remaining areas of the district to adjust for any loss of revenues due to a withdrawn area.   Cities with a population of less than 10,000 and certain unincorporated areas may file a petition to withdraw from TriMet if they meet certain withdrawal criteria.  Petitions for withdrawal can be filed only during the period from January 1st to August 30th in every fifth calendar year.  We are currently in a withdrawal period with the next period coming up in 2016. 

There have been three rate increases due to withdrawals:

  • 1988: Wilsonville, Molalla and Damascus withdraw from TriMet (effective January 1, 1989) rate increased from .6% to .6176%.
  • 1998: City of Sandy withdraws from TriMet district (effective January 1, 2000),  rate increases from .6176% to .6195%.
  • 2002: City of Canby withdraws (effective January 1, 2002) rate increases from .6195% to .6218%.

In 1990, the payroll tax was extended to local government employers (excluding school districts).  The tax rate phased in between July 1, 1990 and July 1, 1994.  The City of Portland and other jurisdictions supported the increase to help pay for the net operating costs of Westside light rail. 

In 2003, the Oregon Legislature gave the TriMet Board the authority to increase the payroll tax rate for employers and self-employed individuals from .6218% to .7218% over a ten year period.  The board approved the increase August 11, 2004 and the payroll tax rate began increasing one-hundredth of a percent each year starting in January 1, 2005.  This increase will continue until January 1, 2014.  On January 1, 2011, the rate increased to .6918%. 

TriMet sought the rate increase to be able to pay for the operating and debt service costs of service increases, including WES, TriMet’s share of the Streetcar extension to OMSI, the Green Line and Portland-Milwaukie Light Rail.  Ten percent annual increases in LIFT ridership from 1999-2009 required using revenues from the rate increase to pay for these costs as well.  The rate increase generated $15.8 million in FY10. 

In 2009, the Oregon Legislature gave the TriMet Board the authority to increase the payroll tax rate for employers and self-employed individuals from .7218% to .8218%.  However, the legislature specified the following:

  • The increase must be phased in over 10 years
  • It could not be implemented before January 1, 2010
  • No annual increase can exceed .02%
  • The TriMet Board must first determine that the economy in the district has recovered to an extent sufficient to warrant the increases. 

Payroll Tax Facts:

  • $179 million was collected in FY10 from employer payroll tax receipts off of a .6218% rate.
  • $16 million was collected in FY10 from employer payroll tax receipts from rate increase.
  • $10.5 million was collected in FY10 from self-employment tax revenues.
  • $   2.5 million: FY10 the state of Oregon paid TriMet this amount in lieu of payroll


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Comments (1)

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    June 20, 2016