The TriMet tax is a local transit tax of 0.8237% in 2026. It applies to wages that employers pay, and to net self-employment earnings, for work done inside the TriMet district in the Portland area. Employers pay the payroll version and report it quarterly. Self-employed people pay the self-employment version on Form OR-TM with their annual return. Where the work is performed decides whether you owe it. Where your business is registered does not.
This guide explains both versions, the differences that trip up owners of multiple businesses and S corporations, and the filing steps. It also covers the penalties for getting it wrong.
TL;DR
- The 2026 TriMet rate is 0.8237%, applied to wages paid or net self-employment earnings for services performed in the district.
- Employers pay the payroll tax and file it quarterly on the Oregon Combined Payroll Tax Report (Form OQ). Self-employed individuals with more than $400 of net earnings in the district file Form OR-TM.
- The tax follows where services are performed, so remote and hybrid work needs location records.
- An extension to file does not extend the time to pay.
- S corporation owners should check how their wages and distributions are treated before assuming they owe nothing.
Table of Contents
- What the TriMet tax is
- Does the TriMet payroll tax apply to your business?
- Calculating the payroll tax
- Filing and paying the payroll tax
- The TriMet self-employment tax
- S corporation owners: where the tax lands
- Common mistakes and what they cost
- Our perspective
- How The Tax Refinery can help
- FAQ
- Sources
What the TriMet tax is
TriMet is the Tri-County Metropolitan Transportation District, the transit agency serving the Portland area. Part of its operating revenue comes from payroll and self-employment taxes that the Oregon Department of Revenue administers and collects on its behalf. You do not pay TriMet directly. You report and pay through the state.
There are two versions:
| Employer payroll tax | Self-employment tax | |
|---|---|---|
| Who pays | Employers with wages for work in the district | Individuals with net self-employment earnings in the district |
| Base | Gross wages for services performed in the district | Net self-employment earnings from activity in or delivered to the district |
| 2026 rate | 0.8237% | 0.8237% |
| How you file | Form OQ, quarterly | Form OR-TM, annually |
The payroll tax is an employer-paid tax. It is separate from the statewide transit tax that is withheld from employee wages, and the two are easy to confuse. The state's own payroll guidance treats them as different programs. Lane Transit District, which serves the Eugene area, has its own separate tax and rate.
Does the TriMet payroll tax apply to your business?
The Department of Revenue states that nearly every employer who pays wages for services performed in the district must pay the tax. The exemptions are specific, for example certain nonprofits and government entities under ORS 267.380. If you think your entity qualifies, check it against that list before you rely on it.
Three points decide most cases.
Location of the work, not the headquarters
A common mistake is to assume a business registered in another county, or another state, is exempt. The tax is based on where the services are physically performed or delivered. A Vancouver, Washington company that sends crews to job sites in Beaverton or Portland has wages tied to the district. The transit payroll tax rule also says the tax applies only to the portion of payroll paid for duties performed inside the district, so an employee who splits time between inside and outside needs the time split documented.
Remote and hybrid employees
If an employee lives in the district but works for a company outside it, where the work is done is what matters. An employee who works at home inside the boundary is generally performing services in the district. We cover the state income tax side of remote work in our guide to remote employee state taxes and convenience rule audits. The same record-keeping habit helps with both.
Your payroll provider may not handle it
A payroll service does not always register your business for the district tax or compute it unless it is set up to. Do not assume. Confirm in writing that the transit tax is being calculated for the right employees and included in your quarterly report. The penalty is $250 per employee, up to $25,000 per tax period, when the tax is not withheld or paid on time.
Calculating the payroll tax
The math is simple. Multiply covered gross wages by 0.008237.
Example. An HVAC company in Hillsboro pays $600,000 in wages in a quarter, all for work performed inside the district.
- $600,000 × 0.008237 = $4,942.20 for that quarter
If $450,000 of those wages were for work inside the district and $150,000 for jobs outside it, only the $450,000 is taxed: $3,706.65. The difference of $1,235.55 exists only if you can prove the split. Job logs, dispatch records, timesheets with site addresses and GPS data are the kind of documentation that holds up.
The employer pays this tax. It is not a deduction from the employee's paycheck. The statewide transit tax is the one withheld from employees.
Filing and paying the payroll tax
Employers report and pay the transit payroll tax quarterly on the Oregon Combined Payroll Tax Report, Form OQ, unless they are domestic or agricultural employers who follow different rules. The Department of Revenue publishes the 2026 combined payroll tax report, which includes the transit boundary information and registration details.
A practical routine:
- Register for an Oregon payroll tax account if you have not already.
- Identify which employees perform services inside the district, and keep that list current as people move or change roles.
- Confirm your payroll system applies the 2026 rate of 0.8237% to the right wage base.
- File Form OQ and pay every quarter, on time.
- Keep your location documentation with the quarterly file.
The Department of Revenue's payroll formulas and rates page lists the current year's information. Check it each January, because rates change.
The TriMet self-employment tax
The self-employment version applies to individuals. Under the Form OR-TM instructions, people who must pay include sole proprietors, independent contractors and members of a partnership who have net self-employment earnings greater than $400 from business or services in the district. Real estate agents are included, since federal law generally treats their commissions as self-employment income. The instructions also say a partnership itself is not subject to the self-employment tax, so the obligation sits with the individual members.
The tax covers earnings from activity carried on or delivered in the district. A freelancer who lives in Salem but delivers services to a client in Portland can be covered. A freelancer who lives in Portland but delivers all services outside the district may have little or no taxable amount. The question is what was done and where it was delivered.
Example
A consultant living in Lake Oswego has $90,000 of net self-employment earnings, all delivered to clients in the district.
- $90,000 × 0.008237 = $741.33 TriMet self-employment tax
This is separate from federal self-employment tax and Oregon income tax. The tax is reported on Form OR-TM, and the payment is due with the return.
Deadlines and extensions
Form OR-TM is generally due on the same date as your federal and Oregon individual returns, typically April 15. An extension of time to file your federal or Oregon return automatically extends the OR-TM filing deadline, but not the time to pay. If you owe, estimate it and pay by the original due date. Interest runs from that date regardless of extension.
If you have separate businesses in the district, you file one return and include a schedule showing net earnings or losses for each business. That matters for owners with several ventures. If you also owe federal estimated payments, our quarterly taxes guide for medical professionals explains how to build a payment calendar that includes local items like this.
S corporation owners: where the tax lands
Owners of S corporations often ask whether the self-employment tax reaches them. The Department of Revenue's instructions point to a split. Distributions to shareholders are not subject to the transit self-employment tax, but compensation the corporation pays to an owner for services performed in the district is wages. The employer owes the payroll tax on those wages like any other employee's.
That has three practical consequences:
- Your S corporation should include owner wages in its quarterly transit tax calculation when the owner works inside the district.
- The reasonable compensation you set for federal purposes also sets the base for TriMet payroll tax. Our S corp owner payroll compliance guide covers how to set and document it.
- Distributions are not a way around wage rules. They should be tracked and supported, as we explain in our guide to S corp distributions.
Owners who file in Oregon through a pass-through entity also have the Oregon PTE tax to consider, and S corporations making estimated payments should read our piece on estimated taxes for Oregon S corps. These are different taxes with different filings, but they interact in a year-end plan.
Common mistakes and what they cost
- Treating the extension as an extension to pay. Interest and penalties start from the original due date.
- Relying on the business address. The tax follows the work location.
- Assuming a payroll vendor handles it. Verify it in your reports.
- Mixing up the statewide tax and the TriMet tax. The statewide transit tax is withheld from employees. The TriMet tax is paid by the employer.
- Having no documentation for the apportionment. If part of your work is outside the district, a split is only as good as your records.
- Ignoring it for a new hire's remote setup. A new employee's home address can change your obligation.
If an assessment has already arrived, do not ignore it. Our guide to a back taxes payment plan in Oregon explains the options for paying over time.
Our perspective
We see the TriMet tax as a small rate that causes outsized trouble. At 0.8237% it rarely changes a business's profitability. What hurts is the penalty of $250 per employee when it is missed, and the cleanup after a year or two of missed quarters. Owners of trades and recurring-service businesses, such as cleaning, HVAC, plumbing and landscaping, run crews across many job sites, and a single crew can cross the district boundary several times a week.
So we tell clients to treat it as a records problem first and a tax problem second. If your job tickets show an address, the apportionment follows easily. If they do not, you are guessing, and a guess is not audit-proof.
We also want owners to look at the tax inside the whole structure. A multi-entity owner may have one entity employing the crews, another owning the equipment and a third holding real estate. Which entity pays the wages decides where the payroll tax lands. That is one more reason entity design should be a planned decision and not an accident.
We are not advocating avoiding a tax you owe. We advocate knowing exactly what you owe, paying it on time and keeping the file that shows why.
— Melissa
How The Tax Refinery can help
We work with business owners, S corporation owners, real estate investors and high-earning professionals. Local transit taxes fit into the larger plan we build with them. Our Monthly Tax Advisory is $11,997 per year, and our Quarterly Tax Strategy Sessions are $9,497 per year. Both give you year-round support, so questions like where an employee's work is sourced get answered before a filing is due.
If you own an S corporation and want your entity, payroll and compensation reviewed, the S-Corp Tax Strategy Accelerator is $997 one-off. For return preparation, our published fee schedule lists Self-Employed returns at $495 and Form 1120-S returns at $1,800. If an assessment has already arrived, we also handle IRS tax resolution.
FAQ
Who is subject to the TriMet tax in Oregon?
Employers who pay wages for work performed inside the TriMet district owe the payroll tax. Individuals with more than $400 in net self-employment earnings from activity in or delivered to the district owe the self-employment tax. Location of the work controls, not the business address.
What is the TriMet tax rate in 2026?
The rate is 0.8237% for both the employer payroll tax and the self-employment tax. Check the TriMet tax information page each year, since rates are updated periodically.
How do I file and pay the TriMet self-employment tax?
You file Form OR-TM with the Oregon Department of Revenue, generally by the same date as your federal and Oregon individual returns. An extension of time to file does not extend the time to pay, so pay what you expect to owe by the original due date.
Do remote employees count toward TriMet payroll tax?
They can. The tax follows where the employee performs the services. An employee who works from home inside the district generally creates district wages, even if the employer is based elsewhere. Keep records showing where each employee works.
What happens if an employer does not pay?
The penalty is $250 per employee, up to $25,000 per tax period, when the tax is not withheld or paid on time. For a bill you cannot pay in full, talk to a tax professional about a payment plan before the balance grows.
Sources
- TriMet: Payroll and Self-Employment Tax Information
- Oregon Department of Revenue: TriMet Transit Payroll Tax
- Oregon Department of Revenue: 2025 Form OR-TM Instructions
- Oregon Department of Revenue: 2026 Oregon Combined Payroll Tax Report
- Oregon Department of Revenue: Payroll formulas, tables and deductions