Washington residents can save Oregon Income taxes


A half year or more of tax savings could be available

The COVID-19 pandemic has delivered a lot of bad financial news to citizens. But for the roughly 75,000 Clark County residents who work in Oregon, there may be some good news. Those citizens may be able to save significantly on Oregon income taxes if they have worked from home the past month.

Clark County residents earned $4.7 billion in Oregon according to a Washington Department of Revenue report. Graphic from Washington Department of Revenue
Clark County residents earned $4.7 billion in Oregon according to a Washington Department of Revenue report. Graphic from Washington Department of Revenue

Vancouver CPA Dan Barnes has many clients who work in Oregon and have to pay the 9 percent Oregon income tax rate each year on the money they earn in Oregon.

Dan Barnes is a Vancouver CPA who advises his clients to document the days they work from home in Washington state. They can save a substantial amount in Oregon income taxes if they do. Photo John Ley.
Dan Barnes is a Vancouver CPA who advises his clients to document the days they work from home in Washington state. They can save a substantial amount in Oregon income taxes if they do. Photo John Ley.

“If you’re a non-resident, the state of Oregon allows you to exempt those wages you’ve earned outside the state of Oregon, from Oregon income tax,” said Barnes, who added that money earned from a full day’s work in Washington wouldn’t apply.

In the era of COVID-19, during which a significant number of people are working from home, Washington residents should document all the days they worked from home, preferably on a calendar or have some other written record. 

Barnes indicated it is acceptable for your employer to provide documentation on your behalf as well.

“The rule is, the number of days worked outside Oregon versus the number of days worked inside Oregon,” said Barnes. “If you work 180 days, and 60 of them, you work outside the state of Oregon, then you get to exempt one third of your wages from Oregon income tax.”

“The trick is, it’s days worked — total days worked, versus total days worked in Oregon,” said Barnes. “So day’s worked does not include vacation, holidays, or sick time. It’s actually the number of days worked.  I recommend everybody take advantage of that.”

The Oregon State treasurer issues an annual report on where income taxes are received. Clark County routinely contributes the eighth largest amount of income taxes to Oregon. In 2017 (the latest information available), 74,139 Clark County residents paid $221 million to Oregon. Another 43,997 Washington residents paid $104 million to Oregon.

Data from Oregon Treasurer reports shows nearly 75,000 Clark County residents paid $221 million in Oregon income taxes in 2017. Graphic from Oregon Treasurer
Data from Oregon Treasurer reports shows nearly 75,000 Clark County residents paid $221 million in Oregon income taxes in 2017. Graphic from Oregon Treasurer

The Washington State Department of Revenue estimated Washington residents paid $325 million to Oregon in a July 2020 report. Clark County Residents earned $4.7 billion in Oregon according to the report, which was based on federal income tax returns.

According to the Oregon Department of Revenue, roughly 7 percent of people who make their living in Oregon, make their home in some other state. Not surprising to anyone driving the two bridges over the Columbia River during rush hour, four out of five of these nonresident workers come from Southwest Washington.

The total Oregon personal income tax liability of nonresidents was nearly $639 million in 2017, or 8 percent of the total tax liability according to the Oregon Department of Revenue, 

Oregon rule 150-316-0165 provides this clarification: “Physical presence is determined by the actual physical location of the employee performing the services and not by the location of the employer … employees who work in Oregon and at an alternate work site located outside of Oregon may allocate their compensation under the provisions of this rule.”

As always, people should consult their tax advisor for details and how this rule applies to them.

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About The Author

John is a retired airline pilot, serving Delta for over 31 years. Prior to Delta, he served in the US Air Force for 11 and a half years; three and a half years as a Public Affairs Officer and eight years as a pilot. John flew multiple airplanes around the world for Delta, retiring as a B-767 Captain. During his 31 years at Delta, John served as a member of the pilot’s union leadership, representing the Portland-based pilots for five years. John got involved in area politics during the Columbia River Crossing debate. He became a citizen activist, speaking out against wasteful spending and fighting for common sense transportation solutions. He ran for the Washington state legislature twice, a Representative position in 2014 and Senate in 2020. John is the eldest of six children. He remains extremely close with members of his family and lives in Oregon and Washington. He has 14 nieces and nephews and a growing number of “grands” in the next generation. John has enjoyed skiing, scuba diving, travel, and time on his Harley when he’s not busy with local issues or flying.

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