Oregon LLC Taxes

LLC Pass-Through Taxation

By default, LLCs don't pay taxes directly. Instead, the LLC members report the income (or losses) on their personal Form 1040 tax return. This is called pass-through taxation — tax responsibility "passes through" the LLC to its owners.

How Are LLCs Taxed in Oregon?

By default, a Oregon LLC is taxed by the IRS based on the number of members:

• An LLC with 1 owner (Single-Member LLC) is taxed like a Sole Proprietorship
• An LLC with 2+ owners (Multi-Member LLC) is taxed like a Partnership

These are the "default" statuses — automatically applied based on member count. You can also elect to have your LLC taxed as a Corporation (S-Corp or C-Corp) by filing extra paperwork with the IRS.

Single-Member LLC (default)

The IRS treats Single-Member LLCs as Disregarded Entities — the LLC doesn't file its own federal return. Instead, the owner reports LLC income on their personal Form 1040 (Schedule C if owned by an individual).

Multi-Member LLC (default)

Multi-Member LLCs file a Form 1065 Partnership Return and issue a Schedule K-1 to each member. Each member then reports their share of profits on their personal Form 1040.

Electing Corporate Taxation

• S-Corporation: File Form 2553 with the IRS. Can reduce self-employment taxes once the LLC has consistent profits (generally $70,000+ net income per member). Speak with an accountant first.
• C-Corporation: File Form 8832 with the IRS. Uncommon for small LLCs. Primarily useful for large employers offering healthcare fringe benefits.

Oregon State Income Tax

Oregon has a state income tax at rates of 4.75%–9.9% (graduated). LLC members report their share of LLC profits on their Oregon state tax return.

Single-Member LLC owners file Oregon Form OR-40 and include LLC income. Multi-Member LLCs file Oregon Form OR-65 (Partnership Return) and issue Oregon K-1s to members. Oregon also imposes a Corporate Activity Tax (CAT) — see below.

Contact the Oregon Department of Revenue at 503-378-4988 for more information.

Oregon Special LLC Taxes

Oregon Corporate Activity Tax (CAT)

Oregon's Corporate Activity Tax (CAT) applies to businesses with Oregon commercial activity exceeding $1 million per year. The rate is $250 plus 0.57% on Oregon commercial activity over $1 million. LLCs below the $1 million threshold are exempt.

Local Income Tax

You and/or your LLC may also need to file and pay income taxes with your local municipality (city, county, etc.). Contact your local government or hire an accountant to confirm local requirements.

Oregon Sales Tax

Oregon does not have a state sales tax — one of only a handful of states with this advantage. However, some local jurisdictions may still impose use taxes. Check with your accountant or local government to confirm.

Oregon LLC Payroll Taxes

If your Oregon LLC has employees, you must handle payroll taxes, which include:

• Federal income tax withholding
• Oregon state income tax withholding
• Social Security and Medicare taxes (FICA)
• Federal unemployment tax (FUTA)
• Oregon state unemployment tax (SUTA)

Payroll calculations are complex — most LLC owners hire a payroll service or accountant.

Oregon Tax Agency Contact

Oregon LLC Taxes — FAQs