Oregon lesson 5 of 6
The Corporate Activity Tax, income tax and licensing
Oregon's distinctive business tax is the Corporate Activity Tax, a gross receipts tax that applies once commercial activity crosses a threshold, on top of the personal income tax that members pay on pass-through profit.
The Corporate Activity Tax
Under ORS 317A.125, the Corporate Activity Tax equals $250 plus 0.57% of a business's taxable Oregon commercial activity above $1 million in a tax year. A business with $1 million or less in Oregon-sourced commercial activity owes no CAT at all. The tax applies to LLCs regardless of federal tax classification, including LLCs that elect S-Corp or C-Corp treatment, since it is measured on gross receipts rather than net income.
File Form OR-CAT with the Department of Revenue if your LLC's activity is likely to exceed the threshold, and register in advance since the filing and payment obligations begin once you cross it, not only at year-end.
Because the CAT is based on gross receipts, not profit, a high-revenue, low-margin business can owe CAT in a year it barely breaks even. Model this separately from your expected income tax.
Personal income tax on pass-through profit
A member of a pass-through Oregon LLC pays Oregon's graduated personal income tax on their share of profit, with rates that rise with income and reach one of the higher top marginal rates in the country. Confirm the current year's brackets on the Department of Revenue's personal income tax pages before filing, since the bracket thresholds are adjusted for inflation each year.
Licensing and no sales tax
Oregon has no statewide general business license, so requirements depend on your industry and on the city or county where you operate; Portland and several other cities levy their own local business license tax on top of state tax. The absence of a state sales tax remains one of Oregon's clearest advantages for retail and service LLCs selling to Oregon customers.
Key takeaways
- The Corporate Activity Tax is $250 plus 0.57% of Oregon commercial activity above $1 million; nothing is owed below that threshold.
- The CAT applies regardless of federal tax classification, including an S-Corp election.
- Personal income tax on pass-through profit is separate from the CAT and uses Oregon's graduated bracket structure.
Frequently asked questions
Does every Oregon LLC pay the Corporate Activity Tax?
No. Only LLCs with more than $1 million in Oregon-sourced commercial activity in a tax year owe the CAT; smaller LLCs owe nothing under this tax.
Does an S-Corp election avoid the Corporate Activity Tax?
No. The CAT is a gross receipts tax that applies based on commercial activity regardless of how the LLC is taxed federally, so an S-Corp election does not exempt it.
Official sources
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Last reviewed: September 2026 - reviewed by Gullia Filing Legal & Formation Team