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PaycheckDesk

Oregon · tax year 2026

Does Oregon tax tips and overtime?

Both deductions cut your state tax too.

Oregon follows both federal deductions, allowing the same amounts your federal return does. It taxes federal AGI from 4.75% to 9.9% after a small standard deduction, then subtracts the federal income tax you actually paid — up to $8,750 — and takes a $260 credit per filer off the result. Because that subtraction tracks your federal bill, claiming the tips deduction shrinks it, which offsets a little of the gain.

What it means on a real paycheck

Take a single filer earning $50,000 a year, $8,000 of it in tips. Against the same person with no tips to declare, the federal deduction is worth $960.

In Oregon it is worth $616 more, because the state follows the federal deduction. Together that is $1,576.

How Oregon works out the tax

Oregon charges graduated rates from 4.75% up to 9.9%, across four bands, after a standard deduction of $2,900 single or $5,800 filing jointly. It begins from your federal adjusted gross income and applies its own reliefs from there.

Worth knowing about Oregon

You can deduct the federal tax you paid

This state lets you subtract your federal income tax bill from your state income. It has an odd consequence: anything that cuts your federal tax — including the tips and overtime deductions — shrinks this subtraction and nudges your state tax up.

The exemption is a credit, not a deduction

$260 comes off the tax itself rather than off your income, and it disappears entirely above $100,000 of income.

Your own numbers

Your gross pay before any taxes or deductions.

Married filing separately cannot claim these deductions at all, so it is not offered here.

Traditional, pre-tax. Lowers income tax but not Social Security or Medicare.

Pre-tax cafeteria-plan premiums. These lower income tax and FICA.

Take-home pay per paycheck (26 per year)

$1,841

$47,865 a year after taxes and deductions.

Oregon follows both federal deductions, allowing the same amounts your federal return does. It taxes federal AGI from 4.75% to 9.9% after a small standard deduction, then subtracts the federal income tax you actually paid — up to $8,750 — and takes a $260 credit per filer off the result. Because that subtraction tracks your federal bill, claiming the tips deduction shrinks it, which offsets a little of the gain. See what that costs you →

Where the money goes each year

Gross salary$62,000
Federal income taxTop rate applied: 12%−$5,260
Social Security−$3,844
Medicare−$899
State income tax (OR)Graduated brackets on $53,840 of state taxable income−$4,132
Take-home pay$47,865

Per paycheck

Gross$2,385
Taxes withheld−$544
Net$1,841

Estimate for tax year 2026 assuming the standard deduction, no dependents or credits, and even pay across the year. Your employer withholds using your Form W-4, so an individual paycheck can differ. Effective total tax rate: 22.8%. Not tax advice.

Where these figures come from

Oregon’s rates and reliefs here were taken from Oregon’s own publication and last checked on 2026-08-02. A state appears in this calculator only once its figures have been read off that state’s own paperwork and covered by tests — never estimated, and never copied from another site.

Figures on this page are for tax year 2026 and were last checked against the primary sources on 2026-07-31. See our sources. This is an estimate, not tax advice.

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