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OREGON TO FUND TRANSPORTATION PROJECTS WITH 2018 TAX INCREASES AND NEW PRIVILEGE, USE AND EXCISE TAXES

07 Sept 2017 OREGON TO FUND TRANSPORTATION PROJECTS WITH 2018
                     TAX INCREASES AND NEW PRIVILEGE, USE AND EXCISE TAXES
By Jamey Parker, CPA

Tax Increases

Effective January 1, 2018
Motor Fuel Tax – In general, the excise license tax per gallon of gasoline and diesel fuel used in a motor vehicle and aircraft fuel sold (but not by a dealer), used, distributed or withdrawn will increase from 30¢ to 34¢. For calendar years beginning 2020 and after, if the Oregon Transportation Commission submits a timely report of specified findings regarding transportation projects, the tax will increase 2¢ per year.

Mileage Tax Rate Changes – New rates are shown in the following table:
                                                  Current            2018-19                2020-21              2022-23
Table A All Types of Fuel
Lowest (26,001)                        49.8 mills          62.3 mills            65.4 mills                72 mills Highest (80,000)                    163.8 mills        204.8 mills             215 mills               237 mills

Table B Axle-Weight
Lowest (5 axles 80,001)            169.2 mills         211.5 mills          222.1 mills       244.7 mills
Highest (> 8 axles 105,500)     157.2 mills         196.6 mills         206.4 mills       227.4 mills

Effective July 1, 2018
Payroll Tax – Oregon resident employees and non-residents performing services in Oregon will be subject to a tax of .1% of wages to fund public transit. If the employer fails to deduct and withhold the tax, they will be liable for paying the tax. They will also be subject to a penalty for failure to deduct and withhold the tax of $250 per employee, up to a maximum penalty of $25,000. The Department of Revenue will determine how Oregon residents who earn wages outside of Oregon will pay the tax.

New Transportation Project Taxes Effective January 1, 2018
Business Privilege Tax on Motor Vehicle Dealers – Business privilege tax on vehicle dealers, which may be collected from the buyer, at the rate of .5% of the retail sales price. Tax does not apply to nonresident buyers or businesses if the storage, use or other consumption of the vehicle will occur outside Oregon. No tax is required on vehicles sold at public events with admission that last less than seven consecutive days. Purchasers in the business of reselling vehicles are exempt if resale certificate is provided.
Use Tax on Vehicles Purchased at Retail from Any Seller – Tax of 5% of retail price of vehicle paid by the purchaser for the storage, use or other consumption of a taxable motor vehicle purchased at retail from any seller. This tax is reduced by any privilege, excise, sales or use tax imposed by any jurisdiction, down to a minimum of zero. Seller collects the tax at the time of sale if they are in business in Oregon or authorized or required to collect it, or if they make sales of taxable motor vehicles subject to use taxes in the state. Taxes are remitted by the seller with a quarterly report.
Excise Tax on Retail Sale of Bicycles – Retail sales of taxable bicycles are subject to a $15 tax to be paid by the purchaser. Bicycles must have at least 26” wheels and a sales price of $200 or more to be taxable. Seller must collect the tax at time of sale and remit it with a quarterly report.

Please call the TKW tax team if you would like more information on this topic. 503.274.2849