Venture Portland reminds all Portland business owners that in November 2013, City Council unanimously approved increasing the Owner’s Compensation Deduction to $100,000 for Tax Year 2014. This deduction allows business owners to deduct 75% of their net income, not to exceed $100,000 per owner, when filing their taxes. The city estimates that more than 4,000 businesses will save $865,000 with the deduction this year. Commissioner Nick Fish, Venture Portland’s Liaison on City Council, championed this issue and ensured its passage as part of his commitment to support Portland’s neighborhood businesses and business districts. For years this deduction was only $50,000 but in 1999 it began to slowly increase with inflation and City Council approval.
Please note, businesses grossing under $50,000 per year before expenses are exempt from paying the business license tax. For nonexempt businesses, the Owners Compensation Deduction allows them to deduct a portion of their net income pre-tax. To register, file or pay business taxes online, or to learn more, visit Portland’s Office of Management and Finance, Revenue Division.
Portland’s business license tax has been in effect since 1854 and is currently 2.2% of a business’s net income. Revenue generated from the tax funds essential city services like police, firefighters and parks. These taxes generated more than $78 million in revenue in 2013; proof that Portland’s neighborhood businesses truly are the backbone of the city’s economy!