If you run a business in Portland, you know the drill: Federal taxes are painful, but local taxes are a labyrinth. Between the City of Portland, Multnomah County, and Metro, it’s easy to miss a deadline and get hit with a “Surprise!” letter from the Revenue Division.

This guide breaks down every single local tax you need to know for the 2026 Tax Year.

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TLDR: The Quick Reference Sheet

Tax Name	Who Pays?	2026 Thresholds	Due Date
Arts Tax	Residents 18+	Income > $1,000	April 15
Business License Tax	All Businesses	Gross Receipts > $50,000	April 15
Metro SHS Tax	High Earners	> $128k (Single) / $205k (Joint)	April 15
Preschool for All	High Earners	> $125k (Single) / $200k (Joint)	April 15
Corporate Activity Tax	Large Businesses	Revenue > $1 Million	April 15

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1. The Portland Arts Tax

This is the one that confuses everyone because it is a “Head Tax” (per person), not a business tax.

• What is it? A $35 fee used to fund arts education in schools.
• Who pays? Every resident of the City of Portland who is 18 or older and earns more than $1,000 in annual income (from any source, not just business).
• The “Gotcha”: This tax is not included in your payroll withholding or your standard tax return. You must file it separately on the Portland Revenue Online portal.
• Late Fees: If you miss the April 15 deadline, the penalty is $15 (starting April 16). If you are 6 months late, it jumps another $20.

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2. City of Portland & Multnomah County Business Tax

If you are doing business in Portland, you are likely subject to two business income taxes that are filed on a single form.

The Exemption Rule (The $50k Line)

You must register with the City of Portland Revenue Division even if you make $1. However, you are exempt from paying the tax if your gross receipts (total sales before expenses) are less than $50,000 for the year.

• Note: You still have to file a return to claim this exemption. You cannot just ignore it.

The Rates (If you earn over $50k)

• City of Portland Business License Tax: 2.6% of net income.
• Multnomah County Business Income Tax: 2.0% of net income.
• Heavy Vehicle Tax: If you operate a business that relies on heavy trucks (over 26,000 lbs) on Portland streets, you may owe an additional surcharge (2.8%).

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3. Metro Supportive Housing Services (SHS) Tax

Voters approved this measure to fund homeless services. It applies to high-income individuals and businesses.

• For Individuals (Personal Income Tax):
  • 2026 Update: The thresholds have been adjusted for inflation. You owe this tax (1%) on taxable income above $128,000 (Single) or $205,000 (Joint).
  • Example: If you are single and make $130,000, you only pay 1% on the $2,000 difference (approx $20).
• For Businesses:
  • Applies only if your business has gross receipts over $5 million.

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4. Multnomah County Preschool for All (PFA)

Similar to the SHS tax, this funds universal preschool.

• The Thresholds:
  • 1.5% tax on taxable income over $125,000 (Single) or $200,000 (Joint).
  • High Earner Kicker: The rate jumps to 3% on income over $250,000 (Single) or $400,000 (Joint).
• 2026 Warning: Be aware that rate adjustments were scheduled for 2026. Check your withholding carefully if you are near these cliffs.

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5. Oregon Corporate Activity Tax (CAT)

This is a state-level tax, but it hits many Portland contractors and agencies.

• The “Commercial Activity” Test: This is a tax on Revenue, not Profit. It applies if your Oregon commercial activity exceeds $1 Million.
• Registration: You must register for the CAT once you hit $750,000 in revenue.
• The Rate: $250 + 0.57% of your taxable commercial activity above $1 million.

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Frequently Asked Questions

Do I need a separate bank account for the Arts Tax?

No, you pay it personally. However, for your business taxes (City/County), you should absolutely pay from your business operating account to keep your records clean.

Can I deduct these taxes on my Federal Return?

Generally, yes. State and local taxes (SALT) paid by your business are often deductible business expenses. The personal portions (like Metro SHS paid on a 1040) are subject to the federal SALT cap itemized deduction limits. Always consult your CPA.

I received a letter from the Revenue Division. What do I do?

Don’t panic, but do not ignore it. The City of Portland is aggressive with non-filers. If you received a “Request for Return,” it likely means they saw you issue a 1099 or apply for a permit but didn’t see a tax return.

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Need Help Getting Audit-Proof?

If reading this list gave you a headache, you are not alone. At Bridgetown Bookkeeping, we specialize in keeping Portland businesses compliant and organized so you can hand a clean file to your CPA without the stress.