Portland Business License Tax & Multnomah County Business Income Tax (MCBIT): What You Need to Know
Many small business owners in Portland are surprised to learn they owe several local business taxes, one to the City of Portland, another to Multnomah County, and one to TriMet. This blog post covers the Portland and Multnomah tax, for more information on the TriMet tax, see here.
Despite its name, the City of Portland Business License Tax isn’t a license fee. It’s actually a tax on your business’s net income. Both taxes are administered by the City of Portland Revenue Division and filed together through one online portal.
If you operate a business entity or sole proprietorship in the Portland metro area, this guide breaks down who needs to file, which businesses are exempt, and how these taxes are calculated.
Why Portland Has Two Local Business Taxes
Portland businesses are subject to two overlapping jurisdictions:
City of Portland Business License Tax
Multnomah County Business Income Tax (MCBIT)
These taxes fund local services like transportation, public safety, and housing programs. While they’re separate, they share the same filing system, so it’s easy to confuse them. You can file both at once through the Portland Revenue Online Portal.
The City of Portland Business License Tax
Who Must File
You’re considered to be “doing business” in Portland if you:
Provide services or sell goods to customers in Portland.
Have a physical or home office in Portland.
Own or lease property in Portland in connection with business activity.
You should register within 60 days of starting business activity.
Rates & Minimum Tax
Rate: 2.6% of adjusted net income
Minimum tax: $100
Applies to: All entity types. For single-member LLCs, the individual (member) is the filing entity for city/county purposes.
Adjusted net income: Starts with federal taxable income (for example, Schedule C net profit) and includes any local adjustments. The City of Portland Business License Tax is based on Portland-apportioned net income, meaning you’re taxed only on income from Portland sources (market-based sourcing).
Important: Market-based sourcing looks at where the customer receives the benefit of the sale or service. For example, if you work in Portland but provide contract services to a business that receives the benefit of those services in California, that income generally would not be Portland sourced. Conversely, if you live in Lake Oswego and provide virtual services to customers who receive the benefit of those services in Portland, that income is considered Portland sourced — even if the work is physically performed outside Portland.
Exemptions and De Minimis Rules
General exemption: Businesses with gross receipts under $50,000 may be exempt but still need to file a return to confirm their status.
De Minimis exemption: Certain sole proprietors or single-member LLCs with under $20,000 in gross receipts may file a one-time De Minimis Exemption Form instead of filing annually.
Filing & Deadlines
Returns are due April 15 (or the 15th day of the fourth month after your fiscal year-end).
File and pay online via the Revenue Online Portal.
The Multnomah County Business Income Tax (MCBIT)
Who Must File
Businesses that are doing business or earning income attributable to Multnomah County may be subject to this county-level income tax.
If your total gross receipts from all activities everywhere are under $100,000, you may qualify for the gross receipts exemption (though a filing may still be required to claim the exemption). Businesses with receipts over that threshold do not qualify for the exemption and must file and pay tax on Multnomah County-apportioned net income.
Rates & Minimum Tax
Rate: 2.0% of net income
Minimum tax: $100
Applies to: All entity types. For single-member LLCs, the individual (member) is the filing entity for city/county purposes.
Exemptions & Apportionment
Exempt: If total gross receipts everywhere are under $100,000, you may qualify for the gross receipts exemption (a filing may still be required to claim the exemption).
Apportionment: Similar to the Portland city tax, businesses earning income inside and outside Multnomah County must apportion net income. Only the portion of net income attributable to Multnomah County is taxed.
Important: Market-based sourcing looks at where the customer receives the benefit of the sale or service. See PDX example above.
Example: How Apportionment Works
Let’s say your business earned:
$120,000 in total gross receipts
$80,000 in net income
Of those sales:
$50,000 are Portland sourced
$10,000 are sourced to other areas within Multnomah County (outside Portland)
$60,000 are sourced outside Multnomah County
Step 1 – Apportion Net Income
Portland Sales / Total Sales = Apportionment %
$50,000 / $120,000 = 41.67%
Multnomah Sales / Total Sales = Apportionment %
$60,000 / $120,000 = 50%
Step 2 – Calculate Portland Net Income
Net Income * Apportionment % = Portland Net Income
$80,000 * 41.67% = $33,336
Net Income * Apportionment % = Multnomah Net Income
$80,000 * 50% = $40,000
Step 3 - Apply Tax Rate
$33,336 * 2.6% = $867
Total tax due to Portland: $867
$40,000 * 2% = $800
Total tax due to Multnomah: $800
If either calculated total tax due is below the $100 minimum, you pay the minimum instead of the calculated tax.
Quarterly Estimated Payments
Businesses must make quarterly estimated payments for the City of Portland and Multnomah County if:
The current-year tax liability for a jurisdiction will be $1,000 or more, and
The prior-year tax liability for that jurisdiction was also $1,000 or more.
Each quarterly payment should equal at least 25% of the current year’s estimated tax liability.
Payments are typically due in April, June, September, and December, aligning with standard quarterly deadlines.
Simple Compliance Checklist
Register with the City of Portland (which also covers Multnomah County).
Review gross receipts everywhere to determine filing requirements.
Calculate adjusted net income (your taxable base).
Apply apportionment if you earn revenue inside/outside the county.
Make quarterly estimated payments if your tax liability for either jurisdiction exceeds $1,000.
File and pay through the Revenue Online Portal by April 15.
Final Thoughts
Filing Portland’s local business taxes might sound intimidating, but once you understand the thresholds, apportionment, and minimums, it’s straightforward to stay compliant. If you’d like help reviewing your Portland or Multnomah County filings, it helps to talk with a CPA who knows the local system inside and out.
Book a free consult with us to get personalized, Portland-specific guidance for your business.
