Contact Us!


Our clients have been asking about the new “Gross Income Tax” that Oregon passed this year. What is it? When does it go into effect? How much is it? Do I have to pay it? We’ve made an attempt to answer some of those questions below. Note 12/12/19: Additional information has been made available since this was originally posted. There will likely be more to come. Keep in mind that this information may already be obsolete, and that you should consult a tax professional regarding your specific situation.

The Short Version:

The Long Version:

According to, “On May 16, 2019, Governor Kate Brown signed House Bill 3427 into law. The legislation […] adopts a new Corporate Activity Tax (CAT) imposed on all types of business entities.”

“Commercial Activity” and “Taxable Commercial Activity” are NOT the same as Gross Income. Gross Income is equal to Net Sales less Cost of Good Sold. “Commercial Activity” as it is currently understood is Gross Income less the greater of 35% of labor costs (not including compensation > $500k paid to any individual), or 35% of “Cost Inputs” as Defined by IRC 471 (ex. material purchases, freight, depreciation).

If your annual “Taxable Commercial Activity” didn’t exceed the $1,000,000 threshold, you are exempt from this tax for the year. Don’t forget the registration requirement for exceeding the $750,000 threshold though. More on that later.

“Commercial Activity” for many of our clients will be very similar to their true “Gross Income.” However, there are 43 items specified as not “Commercial Activity” which may play a role in your specific situation. These items can be found on pages 29-31 HB 3427 linked at the end of this post. A few of those exceptions that may be of interest to our clients include:

The $1,000,000 threshold isn’t the only mark we need to pay attention to. The registration requirement for CAT occurs a lower Gross Income amount as detailed on pages 36-37 of HB 3427:

In addition to these stipulations, if you decide that you want to sell you business, or that you need to close up shop for any reason, keep the following in mind:


In order to illustrate the effect of this new law we’ve included the example presented on the website:

Its important to note that even if Alpha Corp had a net loss of $1,000,000 this year, they still have to pay the Oregon Department of Revenue $98,575.00 for the “privilege of doing business in this state (”

Hopefully, situations like this will be exceedingly rare. We suspect that the majority of the cost imposed on taxpayers will be the result of the administrative burden that this tax creates.

The information we’ve included here is by no means exhaustive and is not intended to be tax advice for you or your organization. You should consult a professional regarding your specific situation. Give us a call or schedule an appointment. We are here to help.

Sincerely, Robert D. Russell, CPA PC


- Related Posts -