The Lane Transit District (LTD) tax is a local transit tax of 0.80% on wages paid, and on net self-employment earnings, for work performed inside the LTD boundary in the Eugene-Springfield area. Employers pay it on payroll and report it quarterly. Self-employed individuals and partnership members pay it on their own earnings with Form OR-LTD. It is separate from Oregon's statewide transit tax, which is withheld from employees' pay.
This guide explains the rate, who owes it, how it works for owners of more than one business, and how to file without penalties. It is written for business owners and high earners who have work, staff or clients in Lane County.
TL;DR
- The LTD rate is 0.80%, effective January 1, 2025. It applies to wages and net self-employment earnings for services performed within the district.
- Employers report it quarterly on Form OQ. Self-employed individuals file Form OR-LTD, generally due with the individual return around April 15.
- The tax follows where the work is performed, not where you live or where your entity is registered.
- Late or missing filings bring interest and penalties, so check your location against the district boundary before the first payroll.
- Owners with several entities should map each one's work location separately, because the tax is calculated entity by entity and person by person.
Table of Contents
- What the Lane Transit District tax is
- Current rate and what it is measured on
- How it differs from the statewide transit tax and TriMet
- Who pays or withholds it
- S corporation owners and high-earning employees
- Owners with more than one business
- How to report and pay
- Interest and penalties
- Common mistakes we see
- Our perspective
- How The Tax Refinery can help
- FAQ
- Sources
What the Lane Transit District tax is
LTD runs bus service in the Eugene-Springfield metro area and nearby rural communities. Part of its operating revenue comes from a payroll tax. LTD explains that employers and self-employed individuals pay this transit tax to the Oregon Department of Revenue, which administers and collects it on the district's behalf.
Two features matter most:
- It is location-based. The tax applies to services performed within the LTD District boundary. A business with an address in Portland can still owe it on work its people do in Springfield. A Eugene business whose staff work entirely outside the boundary may not.
- It has two versions. One is the employer payroll tax, calculated on wages. The other is the self-employment tax, calculated on the net earnings of individuals. Many readers searching for "LTD self employment tax" need the second one.
Current rate and what it is measured on
The rate is 0.80% (0.008). The Oregon Department of Revenue states that it took effect January 1, 2025 and continues to apply in 2026. The Form OR-LTD instructions give the same figure for the self-employment tax. Some payroll vendors publish a slightly different rounded figure for earlier periods, so confirm the rate on the state page before you set up payroll.
A quick example. Say a contractor nets $400,000 from services delivered entirely inside the district. The transit self-employment tax is $400,000 × 0.008 = $3,200. If half the work happens outside the boundary, an apportionment formula reduces the taxable share (more on that below).
How it differs from the statewide transit tax and TriMet
Oregon has three transit taxes that readers often confuse.
| Tax | Who bears it | Rate | Where it applies |
|---|---|---|---|
| Lane Transit District tax | Employer on wages; individuals on net self-employment earnings | 0.80% | Work performed inside the LTD boundary |
| Statewide transit tax | Employee, withheld by employer | 0.1% | Oregon residents wherever they work, and nonresidents working in Oregon |
| TriMet tax | Employer and self-employed individuals | Set separately | Work performed in the TriMet district (Portland area) |
The statewide tax is 0.1% withheld from wages of Oregon residents regardless of where the work is done, and of nonresidents who perform services in Oregon. The Department of Revenue treats it as separate from local transit district taxes. You can owe both on the same paycheck: the employee's statewide 0.1% and the employer's LTD 0.80%.
If your business also operates in the Portland area, read our guide to the Oregon TriMet tax as well.
Who pays or withholds it
Employers
All employers, including nonresident employers, that pay wages earned in the LTD district must register, file and pay the transit payroll tax. That catches out-of-state companies with a remote employee who works from a home office in Eugene, and Idaho or Washington businesses sending crews to jobs in the district.
The Department of Revenue lists several exemptions from the payroll tax, including federal credit unions, public school districts, certain 501(c)(3) and other tax-exempt institutions, and domestic service in a private home. If your organization may fall into one of those groups, confirm it against the state's list before assuming you are exempt.
Self-employed individuals and partners
Individuals with net self-employment earnings above $400 from business or service activities conducted or delivered within the district must pay the transit self-employment tax. Partnership members are subject to it too, and the partnership may elect to file and pay it for them. Some income is exempt, such as compensation for religious services by ministers and specific insurance-related income for insurance agents.
The Department of Revenue treats the tax as the individual's own obligation unless the partnership formally elects to take over filing and payment on its members' behalf, according to the Form OR-LTD instructions.
S corporation owners and high-earning employees
This is where owners most often get it wrong, so it helps to separate the pieces.
- The S corporation as employer. An S corporation that pays its owner-employee a salary for work performed in the district is an employer paying wages. Those wages are the kind of pay the payroll tax is built around, and the corporation reports the tax on Form OQ using its own EIN, as LTD notes that businesses file with the EIN assigned by the IRS.
- The shareholder as an individual. Reasonable salary is wages. Distributions are not wages. How the district treats the owner's share of S corporation income is a question to put to the Oregon Department of Revenue or a tax professional with your numbers in hand, since the answer turns on how the income is earned and where.
- High-earning W-2 employees. If you are an employee, your employer owes the LTD payroll tax, not you. You will see the statewide 0.1% withheld from your pay. You only file Form OR-LTD if you also have side income from self-employment delivered inside the district.
If your income mixes W-2 pay, an S corporation and a side practice, such as a nurse practitioner with a salaried job and a private clinic, each stream needs its own analysis. Our guide on estimated taxes for Oregon S corporations covers how the rest of your Oregon payments fit around this one.
Owners with more than one business
Owners with multiple entities face the same rule applied several times. Ask these questions for each business:
- Where do the people and the work actually sit? A Eugene office, a Springfield shop and a Cottage Grove job site can fall on different sides of the boundary.
- Which entity pays the wages? Each employer with district payroll registers and files under its own EIN.
- Is anyone self-employed or in a partnership? If so, their net earnings tied to district work belong on Form OR-LTD.
- Do the earnings split inside and outside the district? If you conduct business both inside and outside, the instructions require an apportionment formula on Schedule OR-TSE-AP, filed with the return.
If you structure entities across state lines, also review Oregon nonresident filing for remote workers and PTE owners and the Oregon pass-through entity tax, since those interact with the same income.
How to report and pay
Employers
Employers report and pay quarterly on the Oregon Quarterly Tax Report (Form OQ). Payment goes with coupon Form OR-OTC-V or by electronic funds transfer.
Accurate location data is the hard part. Record where each employee works, not just where payroll is processed. Time and attendance records help here, and the payroll base is wages in any case: the federal no tax on overtime rules affect income tax reporting, a separate matter from a local payroll tax measured on wages paid.
Self-employed individuals
- Complete federal Schedule SE.
- Complete Form OR-LTD, the Lane County Mass Transit District self-employment tax return, and attach Schedule SE.
- Add Schedule OR-TSE-AP if you work both inside and outside the district.
- File and pay by the date your individual return is due. The Department of Revenue says it is generally the same day as your federal and Oregon returns, typically April 15.
Interest and penalties
Interest on unpaid LTD tax is computed daily at a rate set annually. For periods beginning January 1, 2026, the annual rate is 8%. Employers who fail to withhold, file or pay on time may face penalties such as $250 per employee, up to $25,000 for each tax period.
If you already have a balance, act before it grows. Our guide to a back taxes payment plan in Oregon explains the options, and our IRS and tax resolution team can help with representation.
Common mistakes we see
- Assuming a registered address decides the tax. The work location does.
- Treating the statewide 0.1% as a substitute for the local tax. They are separate.
- Ignoring a remote employee who lives in the district while the business is elsewhere.
- Forgetting that partners can owe the self-employment version personally.
- Filing a single return for several businesses when each employer EIN has its own obligation.
- Skipping the apportionment schedule when part of the work is outside the boundary.
Our perspective
A transit tax of 0.80% looks small, and that is why it gets neglected. On $500,000 of district earnings it is $4,000 a year, every year, with interest accruing at 8% if it is missed. The bigger cost is usually the cleanup: several years of unfiled quarters, or a partnership return that never assigned responsibility.
We see the problem most with owners who grew into Lane County by accident. A second location opens, a manager works from home in Springfield, or a crew starts a long project in Eugene, and payroll never learns about it. For owners with several entities, we start with a simple map: which entity employs whom, where each person works, and which filings follow. That map also feeds your S corporation salary decisions, your estimated payments and your entity structure.
Tax strategy is not only about the federal return. Local taxes are part of what you keep, and they are easiest to manage when someone looks at them before the year starts, not after a notice arrives.
— Melissa
How The Tax Refinery can help
If your income crosses entities, states or tax districts, a one-time return rarely catches this kind of issue. Our Monthly Tax Advisory is $11,997 per year and our Quarterly Tax Strategy Sessions are $9,497 per year, both built around year-round planning. If you own an S corporation, the S-Corp Tax Strategy Accelerator is $997 one-off. For compliance work, see our form-based fee schedule, or start from our home page to book a conversation.
FAQ
What is the Lane Transit District tax rate?
The rate is 0.80% of wages and of net self-employment earnings for services performed within the LTD District boundary. It took effect January 1, 2025 and still applied in 2026. Check the Department of Revenue page each January in case it changes.
Do I owe the LTD tax if I live in Lane County but work elsewhere?
The tax is based on where the work is performed, not where you live. Work done outside the district boundary is generally not part of the base. If you split time, the self-employment return uses an apportionment schedule.
Is the LTD self-employment tax the same as federal self-employment tax?
No. Federal self-employment tax funds Social Security and Medicare. The LTD tax funds local transit, is filed on Form OR-LTD with a copy of Schedule SE, and applies only to earnings from the district. Net earnings above $400 trigger the filing requirement.
Is the LTD tax the same as the Oregon statewide transit tax?
No. The statewide tax is 0.1% withheld from employee wages, while the LTD tax is a local tax paid by employers and self-employed individuals. You can owe both.
When is Form OR-LTD due?
It is generally due the same day as your federal and Oregon individual returns, typically April 15. Employers use Form OQ each quarter instead.
Sources
- Payroll and Self-Employment Tax Information, Lane Transit District
- Oregon Department of Revenue: Lane County Transit District payroll tax
- Oregon Department of Revenue: Transit self-employment tax
- Oregon Department of Revenue: Statewide Transit Tax
- 2025 Form OR-LTD Instructions
- When does no tax on overtime start