Update on BIT/BLF Business Tax Reform...Next Installment of Reform Rolls-Out This Summer
In 2007, the City of Portland and Multnomah County approved extensive reforms to the city business license fee (BLF) and the county business income tax (BIT). The reform effort sought to ease the tax burden on small businesses and to improve the economic competitiveness of our city and county. With about a month until tax day, we have a quick update on the changes and what's next (click for more).
The changes made in 2007 doubled the annual gross receipts exemption from $25,000 to $50,000 and raised the owner's compensation deduction by 30% to $80,000. The changes were the first installment in a plan to raise the owner's compensation deduction to $125,000 over a five-year period. In addition, a $100 minimum payment for the BIT was adopted in order to better align with the BLF and to increase stability in the tax system. The City Council and County Board also agreed to make the minimum payments progressive by implementing tiers for the minimum. The additional revenue generated by a tiered minimum structure will be used to offset a portion of further increases in the owners' compensation deduction.
The City's Revenue Bureau, which administers both the City's and Multnomah County's tax codes, is now collecting some additional data from business tax filers which will help with implementation of these reforms. The Revenue Bureau, which is currently immersed in tax season, will release a five-year-plan this summer outlining next steps in implementation of the BLF and BIT reform package.
Posted on March 14, 2008
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