Attention Oregon employers! Specifically, attention employers in Eugene, Oregon. A new type of payroll tax is coming your way in 2021. Learn all about the Eugene Community Safety Payroll tax and whether or not you need to withhold and remit it to the city.
What is the Eugene Community Safety Payroll Tax?
The Eugene Community Safety Payroll (CSP) tax is a special payroll tax that both employees and employers have to pay. And, self-employed individuals must pay CSP tax.
Starting in 2021, the Eugene CSP tax will provide long-term funding for community safety services. The Community Safety Payroll tax goes into effect on January 1, 2021. And, the first quarterly tax return and payment (for employees and employers) is due on April 30, 2021.
Currently, the Eugene CSP tax is not permanent. After seven years, the Eugene city council must allow the public to vote on whether or not to keep the Eugene community tax.
Who must pay the Eugene CSP tax?
As mentioned, both employees and employers must pay the tax as well as self-employed individuals. Take a look at who is responsible for paying the Eugene CSP tax and what wages are taxed:
Employer: Applied to total wages paid by an employer with a physical address in the Eugene city limits. Employee: Applied to total wages paid to an employee working for an employer located in the Eugene city limits. Self-employed: Applied to the net earnings from self-employed individuals with a physical address in the Eugene city limits.
Employers are responsible for paying the employer payroll tax as well as withholding and remitting the employee payroll tax portion. Self-employed individuals are responsible for paying the self-employment Eugene payroll tax.
In addition, nonprofit 501(c)(3) organizations are subject to both the employer and employee payroll tax.
Who is exempt?
According to the city of Eugene, public employers are exempt from the employer payroll tax because intergovernmental taxation is prohibited.
Also, wages earned from the following jobs are not subject to the Eugene payroll tax:
Domestic service in a private home Casual labor not in the course of the employer’s trade or business Seasonal labor in connection with the planting, cultivating or harvesting of agricultural crops
Wages that are not subject to withholding under Oregon Revised Statute (ORS) Chapter 316 are also exempt from the Eugene CSP tax.
What is the tax rate?
The Eugene CSP tax rate depends on if you’re an employer, an employee, or a self-employed individual.
For employers, the tax rate varies depending on how many employees you have. Here are the employer rates:
Employers with 1 – 2 employees: 0.0015, or 0.15% for the first $100,000 of wages paid (e.g., salaries, fees, tips, bonuses, etc.) Employers with more than 2 employees: 0.0021 (or 0.21%) of total wages paid
For employees, the tax rate is determined using annualized income tax rate charts divided by pay period, based on the hourly wage rates provided in the ordinance. The employee payroll tax is applied to total wages, after pre-tax deductions. Here are the employee rates:
Employees who make more than $15 per hour: 0.0044, or 0.44% of total wages Employees who make between $12.01 and $15.00 per hour:Continue reading