Oregon State Income Tax

The 1991 Oregon Legislature made PERS benefits subject to state income tax. The Oregon Supreme Court ruled that benefits for service after September 29, 1991, can be taxed. Benefits for service performed before September 29, 1991, can be taxed only if a "remedy" was provided.

To compensate for Oregon personal income taxation, the 1995 Legislature passed HB 3349, which provides a 9.8901 percent benefit increase on benefits earned before October 1991. All retirement benefits reflect this increase where applicable. Individuals who became members after July 14, 1995, are not eligible for HB 3349 benefit increases. HB 3349 benefit increases do not apply to any creditable service Creditable service is one of the factors used to determine a member’s retirement eligibility and pension amount at retirement. Members earn service credit for every calendar month in which they are employed in a qualifying position for more than half the total days in the month and are paid by their PERS-participating employer. Working fewer than 600 hours in a month or taking a leave without pay lasting half the month or more disqualifies a month from earning service credit. earned or prior service acquired by a member under the terms of a contract of integration made on or after October 1, 1991.

PERS withholds Oregon income tax according to the selection(s) you choose on Form W-4P. If PERS does not receive a completed W-4P, it will withhold at the default rate of single with zero exemptions. If you are not a resident of Oregon and do not want Oregon income tax withheld, you must complete a W-4P and elect out of Oregon income tax withholding.

Click the Form button below to access the W-4P form.