Working as a Contractor in Oregon: Tax, Licensing and Getting Paid

Oregon is one of the more regulated states for the trades. You need a state contractor license to take work on, and the income tax runs up to 9.9%, so both your paperwork and your tax bill are heavier here than average. Knowing the rules is the difference between a healthy margin and a nasty surprise.‍‌​​‌‌‌‌​​‌‌​‌‌‌‌‌​‌​​​​‌​‌‌​‌‌​‍

Each section below points to a tool that runs your exact numbers for Oregon.

Tax in Oregon

Oregon has a graduated state income tax that runs up to 9.9% at the top, on top of your federal taxes. Graduated means the rate climbs as your profit does, so a good year costs proportionally more. You owe federal income tax and self-employment tax as well, and you make estimated payments to both Oregon and the IRS through the year.

Oregon has no statewide sales tax, so you do not add sales tax to your work. Some local areas can still levy their own, so check locally if you work in a taxing town.

Work out what to hold back on the Tax Set-Aside Calculator, which runs the federal and self-employment numbers for Oregon.

Getting paid: liens and retainage

A mechanic's lien is the tool that actually gets a Oregon contractor paid, and in Oregon you generally have to record it within 75 days of the earlier of your last day of furnishing or completion of construction. There is usually an earlier notice to send first, so do not wait until the filing deadline to start. Miss it and you lose the lien, so the dates matter.

Enforcing it has its own clock. 120 days from filing the lien. You must also give the owner and any mortgagee 10 days' written notice before you sue. Work out your dates on the Lien Deadline tool, and if they are close, get an attorney to confirm them against the statute (ORS §§87.021(1), 87.035(1), 87.045(1), 87.055, 87.057(1)).

On money held back as retainage, here is where Oregon lands:

• Private work: 5% of the contract price of the work completed.
• Public work: 5% of each progress payment on a public improvement contract. 25% of any amount earned by the contractor on the public works.
• Release: Private: 30 days (the statute does not say whether these are calendar or business days) from the contractor has completed and the owner has accepted the work; if you notify them you are complete and they neither accept nor tell you what is outstanding within 15 days, the clock starts at the end of that 15 days. Public: 30 days (the statute does not say whether these are calendar or business days) from the work under the contract has been completed and accepted, with the same 15-day notify-and-respond mechanism.
• Prompt pay: Since 7 March 2024 you can hand over a surety bond instead of leaving cash retained, and it must be released to you within 30 days. The same works up the chain: a contractor given a bond by a subcontractor must release that subcontractor's retainage within 30 days.

Check the Retainage Calculator before you sign a contract that holds back more.

Free Oregon retainage letters

Three letters written for Oregon's rules, with the state's own release clock and its statutory citation already in them. Fill one in on screen and download it as a PDF or a Word file.

• Retainage Release Request (Oregon), for when the job is done and the money has not come back
• Retainage Overdue: Demand for Payment (Oregon), for when the release date has passed and nothing has arrived
• Retainage Held Above the Cap: Challenge Letter (Oregon), for when more is being held than the state appears to permit

Do you need a license in Oregon?

Oregon requires a state contractor license to take building work on. The threshold that triggers it: No dollar threshold; small projects under $1,000 are exempt. Working unlicensed when your job needs a license is the expensive mistake here. ORS 701.325(1) bars a city, county or state agency from issuing a building permit to a person required to be licensed unless they hold a current valid CCB license. THE CLASS BOUNDARY FIGURE HAS BEEN FOUND, AND IT WAS IN THE WRONG DIVISION RATHER THAN MISSING. ORS 701.005(7)(a) delegates it to board rule, and it is 2,500, at OAR 812-002-0677 (Specialty Contractor): a residential contractor stays a SPECIALTY contractor provided the sum of all contracts, including labor and materials, on any single property DOES NOT EXCEED 2,500 - so exactly 2,500 falls on the specialty side. Earlier searches looked in Division 3 (Licensing); it is a Division 2 (Definitions) rule. It also MOVED - OAR 812-002-0320 carried the figure in its 2009 text and the version amended effective 1 January 2011 drops it entirely, so the rule most people check no longer states it. ORS 701.005(7)(a) also settles the denominator in terms: the sum of all contracts on any single property, INCLUDING MATERIALS AND LABOR, a per-property aggregate rather than a single contract. ORS 701.236, enacted by SB 228 of 2023 and operative 1 January 2024, lets the board make rules where a licensing requirement is unclear, duplicative or in conflict - interpretive only, and it moves neither figure. ORS 701.010 lists TWENTY exemptions, including owner-builders on up to three residential structures a year and agricultural drainage, trenching, irrigation and livestock fencing; none is a disaster-repair or public-works exemption. The license comes from Oregon Construction Contractors Board (CCB). Oregon accepts the NASCLA commercial exam, useful if you work across state lines.

Trade licenses for electrical, plumbing and HVAC are usually separate and often required even where a GC license is not. See what applies to your trade on the Contractor License Checker.

Building codes and permits

Oregon adopts its building codes statewide, so the rules travel with you across the state. Editions still move, so confirm yours with the building department before you price a job.

• Homes: 2021 (published as the 2023 Oregon Residential Specialty Code; effective 1 October 2023, mandatory 1 April 2024)
• Electrical: 2023 (published as the 2023 Oregon Electrical Specialty Code, effective 1 October 2023)
• Energy: the 2021 IRC energy chapter for dwellings, inside the residential code / ASHRAE 90.1-2022 for commercial, published as the 2025 Oregon Energy Efficiency Specialty Code, mandatory since 1 July 2025
• Plumbing: 2021 UPC (published as the 2023 Oregon Plumbing Specialty Code, effective 1 October 2023)

Oregon does not run one edition across the whole job, and the energy code is where it splits: the 2021 IRC energy chapter for dwellings, inside the residential code / ASHRAE 90.1-2022 for commercial, published as the 2025 Oregon Energy Efficiency Specialty Code, mandatory since 1 July 2025. That matters more than the number itself. If you work on houses, the residential edition is your book, and the single figure quoted in most adoption charts is the commercial one.

Oregon builds its own specialty codes on top of the model codes and labels them by its own year, so the 2023 residential code carries the 2021 IRC and the 2025 energy code carries ASHRAE 90.1-2022. Build to the Oregon designation. Two timing points matter more than the numbers. Each code has an effective date and then a mandatory date six months later, and in between the previous edition is still a lawful choice. And the residential and commercial codes are not on the same cycle at all: a house is on the 2023 residential code while a commercial job is on the 2025 structural code. The code applies uniformly throughout the state and no city or county may enact anything conflicting without the division's express authorization, so there is nowhere without a code; in rural areas the division itself issues the permits.

Source: OAR chapter 918, in particular 918-480 (one- and two-family dwelling code) and 918-305-0100 (electrical), Building Codes Division of the Department of Consumer and Business Services under ORS chapter 455, with the uniformity rule at ORS 455.040. Read against that source on 2026-08-25.

Check a specific job on the permit tool.

Pay and workers' comp

The minimum wage in Oregon is $15.55 an hour. Three rates. Standard $15.55, Portland metro $16.80, nonurban counties $14.55. That is the floor for anyone you put on the books, and it is worth confirming against the state labor department each year because several states step their rate mid-year. Check a rate on the minimum-wage tool.

Workers' comp rates in Oregon are not published as a single figure; they turn on your trade's class code and your payroll. Get a realistic range on the Workers' Comp Estimator, then get a real quote.

If a client will not pay

If a client will not pay, you can sue for up to $10,000 in Oregon's Small Claims Dept. (Circuit Court) and lawyers are restricted, so it stays fairly informal. That covers most unpaid-invoice disputes for a small outfit; a bigger claim goes to regular civil court where you will probably want an attorney. Walk through whether filing is worth it on the Small Claims checker.

The clock runs the other way too: a client generally has 6 years to sue you over the work under a written contract in Oregon, with an absolute cutoff 10 years after the job is substantially complete. Work out your exposure on the Warranty & Claim Deadline tool.

Common questions

How much state income tax will I pay in Oregon?

Oregon has a graduated rate up to 9.9% state income tax on your profit, on top of federal income tax and self-employment tax. Use the Tax Set-Aside Calculator to see what to hold back.

Do I need a contractor's license in Oregon?

Yes. Oregon requires a state contractor license. The threshold: No dollar threshold; small projects under $1,000 are exempt. It is issued by Oregon Construction Contractors Board (CCB).

What is the small claims limit in Oregon?

You can sue for up to $10,000 in Oregon's Small Claims Dept. (Circuit Court). The filing fee is typically $37 to $50. Larger claims go to regular civil court.

How long do I have to file a mechanic's lien in Oregon?

Generally 75 days from the earlier of your last day of furnishing or completion of construction, and there is usually an earlier notice to send first. Miss it and you lose the lien. Work your own dates out on the Lien Deadline tool.

How much retainage can be held back in Oregon?

Private: 5% of the contract price of the work completed. Public: 5% of each progress payment on a public improvement contract. Public, prevailing wage non-compliance: 25% of any amount earned by the contractor on the public works. Run your own figure on the Retainage Calculator.

Are there free Oregon contract and payment forms?

Yes. This page links 3 retainage letters written to Oregon's own release clock and carrying its statutory citation. They are free, there is no sign-up, and you fill one in on screen and download it as a PDF or a Word file.

What is the minimum wage in Oregon?

$15.55 an hour in Oregon, above the federal $7.25. Several states step their rate mid-year, so confirm it before you set a payroll.

The honest bit

These are the 2026 rules for Oregon as they stood when this guide was written, and they change: legislatures move thresholds, deadlines and rates every year. Treat this as general guidance to point you in the right direction, not legal, tax or financial advice. Verify anything you rely on at the source (the IRS, the Oregon tax and licensing agencies, and your local building department) or with a professional. Where Oregon does something unusual, the detail is called out above rather than glossed over.

Related: Tax Set-Aside Calculator · Mechanic's Lien Deadline · Contractor License Checker · Small Claims checker · Working in Your State

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