In November 2020, the voters of Multnomah County approved a ballot measure for a new Preschool For All (PFA) personal income tax. The Multnomah County PFA tax was enacted to fund tuition-free preschool programs for 3 and 4-year-olds in Multnomah County. The tax is administered by the City of Portland Revenue Division. The return is due by April 15th following year-end.
- Single filers – all Oregon taxable income over $125,000 is taxes at a 1.5% rate and all income above $250,000 is taxed at a 3% rate. In 2026, the rate increases by 0.8%.
- Joint Filers – all Oregon taxable income over $200,000 is taxed at a 1.5% rate. All income above $400,000 is taxed at a 3% rate. In 2026, the rate increases by 0.8%.
If your income is below the thresholds, you are not required to file a PFA return.
Businesses
Business/entities are not subject to this new PFA tax. However, for S-Corporations, partnerships/LLCs or trusts who filed the Multnomah County/City of Portland Business Income Tax returns, you will need to provide to your owners their share of the Multnomah County taxable income which is computed as the total Multnomah County taxable income times their ownership (profit & loss) percentage. If applicable, include the revenue apportionment percentage from the return you filed.
Individuals
Multnomah County Residents
Residents of Multnomah County will have 100% of their Oregon Taxable Income subject to the tax thresholds.
Non-residents of Multnomah County
For non-residents of the county, income sourced within the County will be subject to the tax thresholds.
- Example 1 – An employee lives outside Multnomah County and also works remotely (outside of Multnomah County) for a Multnomah County employer, the employee’s income would not be subject to the tax.
- Example 2 – An employee lives outside Multnomah County and works 50% of the time inside Multnomah County, 50% of their income would be subject to the tax thresholds.
Withholdings and estimated tax payments
Multnomah County employers are required to provide withholdings for this tax starting in 2022. If your tax liability is $1,000 or more, you need to make quarterly estimated payments or have sufficient withholdings. For the 2021 tax year, no underpayment penalties will be assessed.
Other
If part of the income you reported as Multnomah County taxable income was income passed through to you on a K-1 from a you reported from a K-1 S-Corporation, partnerships/LLC or trust who filed a Multnomah County/City of Portland Business Income Tax return, you can take a deduction on your Multnomah County return for the income already taxed at the entity level (see discussion above under the Businesses heading).
If your FPA return includes income that is subject to out of state income tax, a credit will be given for due on the FPA return.
For more resources, here is a link>> PFA Income Taxes
Related Posts
