Washington State Residents Can Reduce Oregon Tax Bills by Working From Home

Washington residents who commute to Oregon for work may be able to reduce their state income tax bills by working remotely, as Oregon taxes nonresidents on wages earned for work physically performed within the state.

Oregon Taxes Where Work Happens, Not Just Where Employer Is Based

According to the Oregon Department of Revenue, nonresidents generally owe Oregon income tax on wages for work performed in Oregon, but not on work done from home or another location outside the state.

Some benefits, including sick pay and vacation pay, may still be taxable depending on how much of an employee’s work takes place in Oregon.

Workers whose Oregon wages differ from the amounts reported on their W-2 forms may need to explain the discrepancy on their nonresident tax return.

The department recommends obtaining a signed letter from the employer explaining the difference and keeping it with their tax records.

Fewer Clark County Residents Are Filing Oregon Income Tax Returns

Of the more than 120,000 nonresident workers with Oregon jobs in 2023, almost four in five lived in Washington, according to Oregon Employment Department figures.

The decline has been particularly pronounced among Clark County residents in the Portland metropolitan area, where the number filing Oregon income tax returns has fallen. It fell to 69,930 in 2024, below 70,000 for the first time since 2016 and down 11% from 2019.

Despite the decline in filers, Oregon’s income tax liability from Clark County residents has continued to grow. Rising incomes have more than offset the effect of fewer filers.

The Department of Revenue’s 2024 tax statistics report lists $272.6 million in tax liability from Clark County filers, about 8.6% more than in 2019.

Separately, the state’s Legislative Revenue Office estimated that Oregon would have collected an additional $33 million if the number of workers from Clark County had remained unchanged over that period.