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High earners in Portland area navigate confusion over new personal income taxes

The new taxes will impact individuals earning at least $125,000 or $200,000 as a couple.

PORTLAND, Oregon — As we look to tax season, those earning higher wages in the Portland metro area are preparing to pay two new personal income taxes. They are Metro’s Supportive Housing Services tax and Multnomah County’s Preschool for All income tax.

“I've been getting a lot of phone calls this year saying hey, what are these new taxes and what am I supposed to do?” said Richard Sohler, managing attorney for Sohler Whitman. “[The taxes] apply to different jurisdictions; one is Metro which includes Multnomah, parts of Clackamas and Washington counties, and the other is purely for Multnomah County.”

Sohler points out that depending on where you live, you could be paying just one of the taxes, or both.

The other deciding factor is income. Both taxes only apply to those earning at least $125,000 a year as an individual or $200,000 if you're filing jointly. Taxes will be applied to income earned beyond those amounts. Tax rates start at 1.5% for the Supportive Housing Services tax, and 1% for the Preschool for All tax.

RELATED: Yes, you’re more likely to get your refund faster if you file 2021 taxes electronically

Voters approved both income taxes in 2020. In 2021, employers weren't required to withhold income for those taxes, but they will be, in 2022.

“So really the tax payers inside Metro and or Multnomah County need to take their time to go look because you could inadvertently miss that you owed this tax.”

Those who need to pay one or both of the new personal income taxes may do so through the City of Portland Division of Revenue website. Once tax payers get beyond any additional confusion that might create, they’ll find everything they need on the site including tools that will calculate what they owe. The site gives options for downloading forms to pay by mail, or online.

“So whether you live in Clackamas, Washington County or wherever, that City of Portland website is the resource for everyone affected by either the Metro tax or the Multnomah County tax," said Sohler.

Again, starting this month, employers will be required to withhold income for these taxes for employees to whom they apply. If employees want to opt out of those withholdings they can file to do so.

“The biggest thing for employers is to talk to human resources or their payroll service provider to make sure they are aware of the change and the information is getting out to the appropriate employees.”

RELATED: Yes, you need to claim the child tax credit on your 2021 return, even if you got advance payments