Oregon Business Tax Burden Continues to Top U.S. Average
By Oregon Business & Industry,
Oregon tax trend: Before fiscal year 2021, Oregon had one of the nation’s lowest business tax burdens, a competitive advantage that helped offset various disadvantages. These include the state’s high personal income tax rates, its difficult regulatory environment, its scarcity of shovel-ready land for industrial and commercial development, and its high housing costs. Between 2019 and 2023, however, Oregon’s business tax burden soared by 33%, according to a study sponsored by the OBI Research and Education Foundation. Oregon’s business tax burden is now a competitive disadvantage. Go here to see Oregon’s business tax burden over time and here to see its business tax burden ranking over time.
Why it matters: The sudden rise in Oregon’s business tax burden is one of several factors that in recent years have pushed state businesses to invest and grow in other states. As a result, Oregon’s economy has weakened and job creation has happened increasingly elsewhere. Put simply, Oregon’s corporate tax structure – which the nonpartisan Tax Foundation ranks as the nation’s second worst – is preventing Oregon from living up to its potential as a state in which people thrive and businesses innovate and grow.
What’s new: On Jan. 8, the Council on State Taxation (COST) released its annual calculation of state business tax burdens, which further solidifies Oregon’s recently attained status as a high-tax state for businesses. The report applies to fiscal year 2024. For the fourth consecutive year, Oregon’s business tax burden exceeded the national average. At 4.7%, Oregon’s business tax burden in FY 2024 topped the national average (4.5%) by 0.2 percentage points, just as it did in FY 2023. Oregon’s business tax burden in FY 2024 was the nation’s 21st highest, one place lower than in FY 2023 (20th).
The takeaway: From a competitive standpoint, Oregon has dug itself a deep hole in business tax territory since 2019. Between 2020 and 2026, Oregon dropped 27 places in the Tax Foundation’s State Tax Competitiveness Index, falling from 8th to 35th. No state fell further during that time. To improve the state’s economy, legislators must stop digging the hole.
Learn more: Go here to read the COST report. Visit OBI’s Oregon Scorecard for regularly updated competitiveness data and rankings.
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