If you move to the border between Oregon and Washington states, you can save all kinds of money on taxes because Washington has no income and housing prices are lower. Although Oregon has one of the highest income tax rates in the country, the state currently has no sales tax. Income taxes are another consideration when deciding whether to buy a home in Washington or Oregon. And there is a clear difference here.
Washington is one of seven states in the country that do not charge income taxes. Oregon, on the other hand, does collect income tax from its residents. However, Oregon does not charge a sales tax on purchased goods, while Washington has a sales tax of up to 10%. When combined with federal income tax, middle-class Oregon residents can expect to give 52.3 percent of their income to the government.
Washington State has no personal income tax and Oregon has no sales tax, so living in the former while working in the second may seem like the key to a tax-free existence. So, if you're a middle-income person, you'll pay a smaller portion of your income in state and local taxes in Massachusetts than in New Hampshire. Each of the 50 states has its own tax system that is completely independent of the federal tax system administered by the IRS. Washington and Oregon were on the verge of bankruptcy during the Great Recession, but remained stubbornly tied to their fiscal structures.
The same federal income taxes apply to both Oregon and Washington, so you don't receive direct tax benefits for living and working in either place. Washington Residents Working in Oregon Must Pay Oregon State Income Taxes Filed with Form OR-40-N, Oregon Non-Resident Tax Form While the situation is beneficial to Clark County residents, it also provides an opportunity to examine tax structures very different between two states that otherwise have a lot in common. But the graph above provides a rather crude measure of state and local tax burdens compared because they are all grouped together regardless of income. Such is the case of a recent Colombian report on Washington residents who are employees of Oregon companies but who have been working remotely during the pandemic.
However, if you live in Washington and work in Oregon, you can deduct the Oregon state income taxes you paid when you file your federal income tax return. Washington residents who live near the Oregon border often take advantage of sales tax-free shopping in Oregon. The interesting thing about all of this is the impact on people who worked in Oregon and now work from home. A simple way to classify state tax burdens is by the percentage of total income of all state residents that goes to state and local taxes.
With a maximum rate of 9.9 percent, Oregon's personal income tax is one of the highest in the nation and a frequent source of frustration for people who live on the north side of the Columbia River but work in the south.