Thursday, June 20, 2024

New state payroll tax will fund transportation improvements in Oregon

New Tax
Photo by Justin Werner

Oregon employees will see a new one-tenth of one percent withholding tax on their pay stubs beginning July 1. Oregon’s statewide transit tax was part of House Bill 2017 from the 2017 Legislative Session. Revenue from the statewide transit tax will go to finance investments in and improvements to public transportation throughout Oregon, except for those involving light rail.

Those working in Oregon—which includes both residents and non-residents—won’t have to do anything in regards to this tax. While employees pay the tax, employers are responsible for withholding it from employee wages, just like for personal income taxes.

Oregon House Bill 2017 established a new dedicated source of funding for expanding public transportation service in Oregon. This new funding source is called the Statewide Transportation Improvement Fund, or STIF.

Revenue will be allocated to four funds:

  • Formula Fund: Ninety percent (90%) to mass transit districts, transportation districts, or counties without either a mass transit or transportation district, and to federally-recognized tribes based on formula allocation.
  • Discretionary Fund: Five percent (5%) to public transportation service providers based on a competitive grant process.
  • Intercommunity Discretionary Fund: Four percent (4%) to public transportation service providers to improve public transportation between two or more communities based on a competitive grant process.
  • Public transportation technical resource center: ODOT will use one percent of STIF funds to create a statewide resource center to assist public transportation providers in rural areas with training, planning and information technology and fund ODOT administration of STIF.

Eligible applicants:

  • Mass Transit Districts, Transportation Districts, Counties without these districts (Lincoln County), and Indian Tribes are eligible to receive Formula Funds.
  • Public Transportation Service Providers are eligible to apply directly for discretionary funds. They include the agencies described above and  cities, counties, Special Districts, Intergovernmental Entities, or other political subdivisions or Public Corporations that provide public transportation services.
  • Formula Fund revenues will be distributed upon Oregon Transportation Commission approval of a STIF plan that specifies service improvements, costs, and anticipated outcomes.
  • Lincoln County is estimated to be eligible to receive up to $1.3 million in Formula Funds in the next biennium. Link to Formula Fund allocation estimate that shows allocation to each Qualified Entity in Oregon.

Purpose and use of STIF funding:

In general, STIF is intended to finance investments and improvements in public transportation. Advisory committees are required to consider the following criteria when reviewing proposed projects. Whether the project would:

  • Improve transit service to low-income households through new routes, expanded frequency of service, and low-income fare programs
  • Procure buses powered by low or no emission propulsion in communities over 200,000 population
  • Improve frequency and reliability of service within and between communities
  • Improve coordination between transit providers to reduce the fragmentation of transit services
  • Provide student transit services for grades 9-12
  • Among other criteria, such as does it maintain an existing, productive service, meets public transportation goals, is a responsible use of public funds; and other factors as may be determined by the agency or Advisory Committee, such as geographic equity.

For more information on how statewide transit tax revenues will be used, check out “HB 2017 Funding Package” under “Projects & News” on the Oregon Department of Transportation’s website at To learn more about the tax, visit the Department of Revenue online at


Justin Werner
Justin Werner
Justin Werner is the founder and editor of the Lincoln City Homepage, a trusted source of local news and information for residents and visitors of Lincoln City, Oregon. He is also a community leader, entrepreneur, and dedicated advocate for transparency and accountability in local government.



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