Short-Term Rental Taxes in Oregon: High Rates, Bonus Dep Non-Conformity, and Bend/Coast Guide
4.75–9.9% graduated state income tax (high) | Oregon does NOT conform to federal bonus depreciation | No state sales tax, but 1.8% state transient lodging tax + local lodging taxes | Portland total lodging tax up to ~15% | Top markets: Bend, Oregon Coast (Cannon Beach, Lincoln City), Hood River, Crater Lake area | Work with an Oregon CPA on depreciation planning
Oregon presents a mixed picture for STR investors. On the positive side, no state sales tax simplifies guest-facing tax collection, and the STR markets are excellent — Bend's outdoor recreation economy, the dramatic Oregon Coast, Hood River's windsurfing and Columbia Gorge beauty, and the proximity to Portland's affluent traveler base. On the negative side, Oregon has high income tax rates (up to 9.9%) and does not conform to federal bonus depreciation — a combination that requires careful tax planning.
Oregon State Income Tax: High Rates
Oregon's top marginal income tax rate of 9.9% is the fourth-highest in the United States and the highest in the Pacific Northwest. Most STR investors with significant rental income will be in the 8.75% or 9.9% bracket. Oregon also imposes an additional 1% income tax (the Corporate Activity Tax) on certain business activities, and Portland has its own metro-area income taxes. For high-income investors, combined federal + Oregon rates can approach 50% on ordinary income.
CRITICAL: Oregon's Bonus Depreciation Non-Conformity
Oregon does not conform to federal bonus depreciation. When you claim 100% bonus depreciation on 5-year and 15-year assets via cost segregation, Oregon requires you to add back the excess depreciation on your OR-40 and use Oregon's own depreciation schedule. Your Oregon taxable income in Year 1 will be significantly higher than your federal taxable income.
With Oregon's 8.75–9.9% top rates, this addback can be costly in Year 1. However — as with all bonus depreciation non-conformity states — this is a timing difference, not a permanent loss. Over the full asset life, Oregon allows the same total depreciation as federal. The net present value of cost segregation is still strongly positive given the federal savings at 37%. Work with an Oregon CPA to model the multi-year state tax cash flow and ensure the addback is properly calculated.
Oregon Transient Lodging Tax by Market
Oregon has no state sales tax, but the state-level transient lodging tax (TLT) and local lodging taxes can be substantial — especially in Portland.
| County / Market | State TLT | Local Lodging Tax | Approximate Total |
|---|---|---|---|
| Portland (Multnomah County) | 1.8% | ~13.5% | ~15.3% |
| Deschutes County (Bend) | 1.8% | ~9.5% | ~11.3% |
| Clatsop County (Cannon Beach/Seaside) | 1.8% | ~8% | ~9.8% |
| Hood River County | 1.8% | ~10% | ~11.8% |
| Lincoln County (Lincoln City/Newport) | 1.8% | ~9.5% | ~11.3% |
| Jackson County (Ashland/Medford) | 1.8% | ~6% | ~7.8% |
| Lane County (Eugene/Florence coast) | 1.8% | ~5% | ~6.8% |
| Klamath County (Crater Lake area) | 1.8% | ~5% | ~6.8% |
Top Oregon STR Markets
- Bend (Deschutes County): Oregon's fastest-growing STR market; outdoor recreation capital with skiing (Mt. Bachelor), hiking, mountain biking, and kayaking; year-round demand; vibrant food and craft beer scene; strong convention and corporate retreat market
- Oregon Coast (Cannon Beach, Lincoln City, Newport): Iconic dramatic coastline; Cannon Beach (Haystack Rock) is one of Oregon's most recognized images; storm watching in winter is a genuine shoulder-season driver; strong Portland/Willamette Valley demand
- Hood River / Columbia River Gorge: World-class windsurfing and kiteboarding; orchards and wine country; gateway to Mt. Hood; year-round demand with distinct seasonal peaks; high property values relative to market size
- Ashland (Jackson County): Oregon Shakespeare Festival drives exceptional cultural tourism (April–October); unique niche but extremely loyal visitor base
- Southern Oregon Coast (Brookings, Gold Beach): Warmer, sunnier coast; lower property prices than northern coast; growing remote-worker/long-stay market
Estimate Your Oregon STR Tax Savings
Oregon's high state rates make the federal savings from cost segregation even more powerful in relative terms. Get your free estimate for your Bend or coastal property.
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