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In May 2020, voters in the Portland metro area approved a program to raise money for supportive housing services for people experiencing homelessness.
The program is funded by the Metro Supportive Housing Services Tax, a local personal income tax and a business income tax. The taxes went into effect January 1, 2021.
The Metro Supportive Housing Services Tax is a 1% business income tax imposed on net income for businesses with gross receipts above $5 million.
Example: Corporation A has $6 million in gross receipts with $1 million in profits
The Metro Supportive Housing Services Tax is a 1% tax imposed on:
Enter an address here to see if a residence, workplace, or earned business income is within the Metro District boundary.
Single filers are exempt from the first $125,000 of taxable income. Joint filers are exempt from the first $200,000 of taxable income.
Example: Single filer expects to earn $200,000 for tax year 2021
An employer must offer in writing to withhold this Metro personal income tax from employees' wages as soon as the employer's payroll system can be configured to capture and remit the taxes. Due to the challenge of this transition, Metro will not assess penalties if withholding is not available in 2021. Employers will be able to register and make payments of estimated business taxes and payroll withholding beginning April 1, 2021.
This tax is administered by the City of Portland. Employers can file and pay electronically with Portland Revenue Online.
Employees who are not exempt from this tax can opt to have the tax withheld from their paycheck; the withholding is voluntary for employees in calendar year 2021. If employees do not opt to have the tax withheld from their paychecks, they can instead make quarterly estimated payments or pay with their annual tax return if the tax liability is less than $1,000.
Beginning January 1, 2022, employers with a Metro location are required to withhold the Metro Supportive Housing Services Tax from employees who work within the Metro District and earn $200,000 or more during the calendar year. This applies to both resident and nonresident employees.
Metro has released two versions of an employee Opt In/Out Form, which allows employees to opt in or opt out of withholding the tax or to designate a different withholding amount:
Stay tuned for more information. Metro's authority to impose this tax is being challenged by a consortium of business groups. The basis for these challenges is whether Metro exceeded its taxing authority granted pursuant to state law. Delap will continue to monitor these developments as more guidance is issued.
If you or your business would like assistance navigating the Metro tax or its impacts, contact your Delap engagement professional.