Oregon Corporate Activity Tax (CAT) for LLCs

The Oregon Corporate Activity Tax (CAT) is a separate tax on commercial activity that affects LLCs with gross revenue exceeding $1 million from Oregon customers. Enacted in 2019 (HB 3427) and effective January 1, 2020, the CAT is NOT an income tax — it's levied on gross commercial activity with limited subtractions. For the complete tax picture, see our tax guide. For LLC formation, see our formation guide.

CAT Overview

What Is "Commercial Activity"?

Commercial activity is broadly defined as gross revenue from transactions and activity in Oregon:

• Sales of tangible personal property delivered to Oregon customers
• Services where the customer receives benefit in Oregon
• Rents and royalties from Oregon property
• Other gross receipts from Oregon business transactions

Excluded from commercial activity:

• Receipts from sales of assets not held for sale in ordinary course of business
• Interest income (for non-financial businesses)
• Insurance proceeds
• Amounts received from an affiliated entity for cost reimbursement

CAT Calculation Example

Oregon LLC with $2 million in Oregon commercial activity and $600,000 in labor costs:

1. Commercial activity: $2,000,000
2. Subtract $1 million threshold: $1,000,000 taxable
3. Subtraction (35% of $600,000 labor costs): $210,000
4. Net taxable amount: $1,000,000 - $210,000 = $790,000
5. Tax: $250 + ($790,000 x 0.57%) = $250 + $4,503 = $4,753

For comparison — an LLC with $900,000 in Oregon commercial activity:

• Below the $1 million filing threshold
• Owes $0 in CAT
• Must still register if over $750,000

Who Owes the CAT?

The CAT applies to all business entities regardless of federal tax classification:

• Single-member LLCs (disregarded entities)
• Multi-member LLCs (partnerships)
• LLCs taxed as S-corps
• LLCs taxed as C-corps
• Sole proprietors, corporations, partnerships — all entity types

However: Most small Oregon LLCs will never owe CAT. The $1 million commercial activity threshold excludes the vast majority of small businesses. If your LLC generates less than $750,000 in Oregon revenue, you don't even need to register for the CAT.

How to Register and File

Registration (required if Oregon commercial activity exceeds $750,000):

1. Register at Oregon Revenue Online (revenueonline.dor.oregon.gov)
2. You'll receive a CAT account number
3. Registration should happen within 30 days of exceeding the $750,000 threshold

Filing:

• Annual CAT return due April 15 (for calendar-year filers)
• Filed electronically through Oregon Revenue Online
• Extensions available (request before due date)

Estimated payments (required if annual CAT liability exceeds $5,000):

• Due quarterly: April 15, July 15, October 15, January 15
• Underpayment penalties apply if quarterly estimates are insufficient

CAT vs. Oregon Income Tax

The CAT and Oregon income tax are separate obligations:

Important: The CAT is deductible against Oregon income tax. So while it's an additional tax, it reduces your income tax obligation.

CAT vs. Sales Tax

Oregon's CAT is sometimes compared to a sales tax, but there are critical differences:

• CAT is paid by the business on its gross revenue — customers never see it on their receipt
• Sales tax is collected from customers and remitted to the state
• CAT applies to services — sales taxes in other states often exempt many services
• CAT has no consumer visibility — it's an internal business cost
• CAT replaced nothing — Oregon still has no sales tax; the CAT was a new, additional tax

The CAT was enacted to fund public education (Oregon's Student Success Act). It generates approximately $1.5-2 billion annually for the state.

Impact on LLC Profitability

Because the CAT is levied on gross receipts (not profit), it can disproportionately affect:

• Low-margin businesses — A grocery store with $5M revenue but 2% margins pays CAT on the full $5M even though profit is only $100K
• Businesses with high costs of goods sold — The 35% subtraction helps but doesn't fully account for COGS
• Service businesses with high labor — The labor subtraction helps but is still capped at 35%

For high-margin businesses (consulting, tech, professional services), the CAT is relatively modest compared to the income already being generated.

FAQ

My LLC made $800,000 in Oregon revenue. Do I owe CAT?

You must register (over $750K threshold), but you don't owe any CAT payment until you exceed $1 million in Oregon commercial activity. File a $0 return.

Is the CAT in addition to Oregon income tax?

Yes. The CAT is a completely separate tax from Oregon personal income tax. However, CAT paid is deductible as a business expense against your income tax, so it's not pure double taxation.

Can I pass the CAT cost on to customers?

There's no legal requirement either way. Some businesses raise prices to account for the CAT; others absorb it. Unlike sales tax, you cannot list it as a separate line item on customer invoices .

Does out-of-state revenue count toward the $1M threshold?

Only Oregon commercial activity counts. If your LLC makes $3M total but only $800K is from Oregon customers, you're below the $1M filing threshold. Revenue from customers outside Oregon is excluded from the CAT calculation.