What Taxes Do Small Businesses Pay in Portland?
Running a small business in Portland comes with a unique mix of creativity, community, and, yes, complexity when it comes to taxes. Between the City of Portland / Multnomah County, TriMet and Oregon State requirements, it’s easy for even seasoned business owners to overlook a filing or underestimate a local obligation. If you operate a business entity or sole proprietorship in the Portland metro area, this guide will help you understand which taxes apply, who must file, and when you might be exempt, so you can stay compliant and confident year-round.
Before diving into local rules, it helps to see the big picture. Most Portland small businesses pay taxes at three levels:
Federal – IRS income and self-employment taxes based on your net earnings.
State – Oregon income tax and (in some cases) the Corporate Activity Tax (CAT).
Local – City of Portland Business License Tax / Multnomah County Business Income Tax (MCBIT) and TriMet Self Employment Tax.
Each layer has its own forms, filing dates, and thresholds, so let’s break them down clearly.
Corporate Activity Tax (CAT)
Most small businesses won’t owe Oregon’s Corporate Activity Tax, it only kicks in once your Oregon sales exceed $1 million in a year.
Rate: $250 + 0.57% of Oregon commercial activity above $1 million.
Registration: Businesses with over $750,000 in Oregon sales must register for the CAT, but you don’t actually owe the tax until sales exceed $1 million.
Applies to: All entity types.
Filing and guidance: Oregon Department of Revenue – CAT
City of Portland Business License Tax
Who Must File
If your business earns money from activity within Portland city limits, even if you’re home-based or work remotely, you likely must register with the City of Portland Revenue Division. Keep in mind that because Portland assesses this tax based on doing business, or providing services within Portland, you may be subject to the tax even if you don’t work in Portland. And conversely, you may live in Portland, and not owe this tax, if the services you provide are not received in Portland.
Applies to all entity types. For single-member LLCs, the individual (member) would be the filing entity for city/county purposes.
Register within 60 days of starting business activity in the city.
Rates and Minimum Tax
Rate: 2.6% of adjusted net income
Minimum tax: $100
Adjusted net income: Federal net income with certain 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).
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 the business registration form and annual exemption request each year.
Filing and 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 City of Portland Revenue Division
Multnomah County Business Income Tax (MCBIT)
Who Must File
If your business operates or serves anywhere in Multnomah County you may owe the county’s Business Income Tax. Keep in mind that because the county assesses this tax based on doing business, or providing services within the county, you may be subject to the tax even if you don’t work in Multnomah. And conversely, you may live in Multnomah, and not owe this tax, if the services you provide are not received in Multnomah.
Applies to all entity types. For single-member LLCs, the individual (member) would be the filing entity for city/county purposes.
Businesses with gross receipts under $100,000 (everywhere) may qualify for exemption (but typically still file to claim it).
Rates and Minimum Tax
Rate: 2.0% of net income
Minimum tax: $100
Like the City of Portland Business License Tax, taxes are based on your share of income attributable to business conducted within the county.
Exemptions and Filing
Gross receipts under $100,000 may qualify for exemption.
Returns are filed jointly with the City of Portland Business License Tax through the city’s online portal.
Learn more: Multnomah County Revenue Division
TriMet Self-Employment Tax
Perhaps the most forgotten tax is the TriMet Self-Employment Tax. Taxpayers with self-employment earnings from doing business or providing services within the transit districts are subject to transit self-employment tax. Similar to the PDX/MCBIT, services are sourced to the district where delivered (market-based). If you have net self-employment earnings greater than $400 from business or service activities in or delivered to the TriMet districts, you must pay transit self-employment tax.
Other Local Taxes to Know
Metro Supportive Housing Services (SHS) Business Income Tax
Applies to businesses with over $5 million in gross receipts that operate within the Metro jurisdiction.
Rate: 1% of net income.
Payroll and Withholding
If you have employees, you must comply with Oregon payroll taxes and may also owe local taxes.
Quick Compliance Checklist
Confirm registration with the City of Portland Revenue Division (for City of Portland Business License Tax & MCBIT).
Review your gross receipts from everywhere for exemption eligibility.
Calculate adjusted net income from city/county sources.
File city and county returns by April 15 each year.
Bookmark the official online filing portal for easy access.
Final Thoughts
Staying compliant with local business taxes isn’t just about avoiding penalties, it’s about running your business with confidence. Understanding these taxes helps you make informed decisions all year long. And remember, every business is unique. If you’re unsure which taxes apply to your situation, it helps to talk with a CPA who understands Portland’s local rules.
Book a free consult with us to get personalized, Portland-specific tax guidance.
