Silicon oxynitride rectangular optical waveguides have been fabricated by plasma-enhanced chemical vapor deposition and dry etching. The propagation loss and polarization dependent loss in as-grown samples show a substantial reduction after the samples have been annealed. Birefringence measurements before and after annealing on waveguides of different widths suggest that the waveguide modal birefringence is strongly affected by both waveguide geometry and stress in the material. Hence, the modal birefringence can be minimized by designing the appropriate waveguide geometry to compensate for any stress effects.