°ÅÀÖÊÓƵ

What happened: The Oregon Department of Revenue (DOR) announced that it had paused implementation of the payroll tax increase contained in the HB 3991, the transportation funding package adopted during this year’s special legislative session. The tax was scheduled to double effective Jan. 1, 2026. The department’s decision follows the submission of nearly 200,000 signatures gathered in an effort to refer components of HB 3991 to the November 2026 ballot. That’s almost certainly more than enough signatures to ensure a public vote.

Why it matters: Given that the existing law requires employers to withhold the additional 0.1% payroll tax starting Jan. 1, There was some confusion about what would happen if Jan. 1 rolled around before the Elections Division had finished validating the signatures. The validation deadline is Jan. 29, though the secretary of state is likely to finish well before then. Clarity from the DOR is much appreciated.

What’s next: Assuming the referendum qualifies for the ballot, employers will not be required to collect an additional 0.1% payroll tax from employees for public transit. Instead, they will continue to collect the preexisting payroll tax for public transit – also 0.1% - enacted in 2017 through the passage of HB 2017.  

What’s being referred: The referendum involves only . These include a 6-cent gas tax increase, registration and title fee increases and, of course, the doubling of the employee-paid payroll tax for public transit.