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%. Oregon taxes all types of income, including tips, interest, and unemployment benefits, as well as your wages.
Meanwhile, Washington residents get some benefits from those taxes on paved streets, police and fire protection, the criminal justice system if they spend a lot of time in Oregon. The personal income tax benefit in this situation occurs only if you work partly in Oregon and partly in Washington, or if your spouse or other household members live with you in Washington and also work in that state. So, if you look at the states as a whole, buying a home in Washington versus Oregon is comparable from a cost perspective. More than a decade ago, representatives of Washington's Congress tried to use the power of the federal government to change that law; they didn't succeed.
When Oregonians lose their jobs, they effectively leave the tax system because it is based on an income tax. As with other elements, you are still responsible for federal taxes on all types of income, but you'll save yourself the hassle of filing information twice, once at the state level and once at the federal level, when you live in Washington. While their roads are different, Washington and Oregon eventually reach similar destinations when it comes to taxes. 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.
While you must report income taxes in the state of Oregon on your tips and other income earned there, your bank account and other interest accounts will remain tax-free at the state level if you are based in Washington. Washington residents who live near the Oregon border often take advantage of sales tax-free shopping in Oregon. Washington residents working in Oregon must pay Oregon state income taxes filed with Form OR-40-N, the Oregon Non-Resident Tax Form.
