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STATE OF OKLAHOMA
1st Session of the 58th Legislature (2021)
COMMITTEE SUBSTITUTE
FOR
HOUSE BILL NO. 2962 By: McCall, Wallace and Hilbert
of the House
and
Treat, Thompson and Hall of
the Senate
COMMITTEE SUBSTITUTE
An Act relating to revenu e and taxation; amending 68
O.S. 2011, Section 2355, as last amended by Section
2, Chapter 195, O.S.L. 2014 (68 O.S. Supp. 2020,
Section 2355), which relates to individual income
tax; modifying tax rates; amending 68 O.S. 2011,
Section 2357.43, as amended by Section 1, Chapter
341, O.S.L. 2016 (68 O.S. Supp. 2020, Section
2357.43), which relates to the earned income tax
credit; modifying provisions related to
refundability; providing method for computation of
tax credit using designated tax year; and provid ing
an effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2011, Section 2355, as
last amended by Section 2, Chapter 195, O.S.L. 2014 (68 O.S. Supp.
2020, Section 2355), is amend ed to read as follows:
Section 2355. A. Individuals. For all taxable years beginning
after December 31, 1998, and before January 1, 2006, a tax is hereby
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imposed upon the Oklahoma taxable income of every resident or
nonresident individual, which tax sha ll be computed at the option of
the taxpayer under one of the two following methods:
1. METHOD 1.
a. Single individuals and married individuals filing
separately not deducting federal income tax:
(1) 1/2% tax on first $1,000.00 or part thereof,
(2) 1% tax on next $1,500.00 or part thereof,
(3) 2% tax on next $1,250.00 or part thereof,
(4) 3% tax on next $1,150.00 or part thereof,
(5) 4% tax on next $1,300.00 or part thereof,
(6) 5% tax on next $1,500.00 or part thereof,
(7) 6% tax on next $2,300.00 or part thereof, and
(8) (a) for taxable years beginning after December
31, 1998, and before January 1, 2002, 6.75%
tax on the remainder,
(b) for taxable years beginning on or after
January 1, 2002, and before January 1, 2004,
7% tax on the remainder, and
(c) for taxable years beginning on or after
January 1, 2004, 6.65% tax on the remainder.
b. Married individuals filing jointly and surviving
spouse to the extent and in the manner that a
surviving spouse is permitted to file a joint return
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under the provisions of the Internal Revenue Code and
heads of households as defined in the Internal Revenue
Code not deducting federal income tax:
(1) 1/2% tax on first $2,000.00 or part thereof,
(2) 1% tax on next $3,000.00 or part thereof,
(3) 2% tax on next $2,500.00 or part thereof,
(4) 3% tax on next $2,300.00 or part thereof,
(5) 4% tax on next $2,400.00 or part thereof,
(6) 5% tax on next $2,800.00 or part thereof,
(7) 6% tax on next $6,000.00 or part thereof, and
(8) (a) for taxable years beginning after December
31, 1998, and before January 1, 2002, 6.75%
tax on the remainder,
(b) for taxable years beginning on or after
January 1, 2002, and before January 1, 2004,
7% tax on the remainder, and
(c) for taxable years beginning on or after
January 1, 2004, 6.65% tax on the r emainder.
2. METHOD 2.
a. Single individuals and married individuals filing
separately deducting federal income tax:
(1) 1/2% tax on first $1,000.00 or part thereof,
(2) 1% tax on next $1,500.00 or part thereof,
(3) 2% tax on next $1,250.00 or part thereo f,
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(4) 3% tax on next $1,150.00 or part thereof,
(5) 4% tax on next $1,200.00 or part thereof,
(6) 5% tax on next $1,400.00 or part thereof,
(7) 6% tax on next $1,500.00 or part thereof,
(8) 7% tax on next $1,500.00 or part thereof,
(9) 8% tax on next $2,000.00 or part thereof,
(10) 9% tax on next $3,500.00 or part thereof, and
(11) 10% tax on the remainder.
b. Married individuals filing jointly and surviving
spouse to the extent and in the manner that a
surviving spouse is permitted to file a joint return
under the provisions of the Internal Revenue Code and
heads of households as defined in the Internal Revenue
Code deducting federal income tax:
(1) 1/2% tax on the first $2,000.00 or part thereof,
(2) 1% tax on the next $3,000.00 or part thereof,
(3) 2% tax on the next $2,500.00 or part thereof,
(4) 3% tax on the next $1,400.00 or part thereof,
(5) 4% tax on the next $1,500.00 or part thereof,
(6) 5% tax on the next $1,600.00 or part thereof,
(7) 6% tax on the next $1,250.00 or part thereof,
(8) 7% tax on the next $1,750.00 or part thereof,
(9) 8% tax on the next $3,000.00 or part thereof,
(10) 9% tax on the next $6,000.00 or part thereof, and
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(11) 10% tax on the remainder.
B. Individuals. For all taxable years beginning on or after
January 1, 2008, and en ding any tax year which begins after December
31, 2015, for which the determination required pursuant to Sections
4 and 5 of this act is made by the State Board of Equalization, a
tax is hereby imposed upon the Oklahoma taxable income of every
resident or nonresident individual, which tax shall be computed as
follows:
1. Single individuals and married individuals filing
separately:
(a) 1/2% tax on first $1,000.00 or part thereof,
(b) 1% tax on next $1,500.00 or part thereof,
(c) 2% tax on next $1,250.00 or part thereof,
(d) 3% tax on next $1,150.00 or part thereof,
(e) 4% tax on next $2,300.00 or part thereof,
(f) 5% tax on next $1,500.00 or part thereof,
(g) 5.50% tax on the remainder for the 2008 tax year and
any subsequent tax year unless the rate prescr ibed by
subparagraph (h) of this paragraph is in effect, and
(h) 5.25% tax on the remainder for the 2009 and subsequent
tax years. The decrease in the top marginal
individual income tax rate otherwise authorized by
this subparagraph shall be contingent up on the
determination required to be made by the State Board
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of Equalization pursuant to Section 2355.1A of this
title.
2. Married individuals filing jointly and surviving spouse to
the extent and in the manner that a surviving spouse is permitted to
file a joint return under the provisions of the Internal Revenue
Code and heads of households as defined in the Internal Revenue
Code:
(a) 1/2% tax on first $2,000.00 or part thereof,
(b) 1% tax on next $3,000.00 or part thereof,
(c) 2% tax on next $2,500.00 or part thereof,
(d) 3% tax on next $2,300.00 or part thereof,
(e) 4% tax on next $2,400.00 or part thereof,
(f) 5% tax on next $2,800.00 or part thereof,
(g) 5.50% tax on the remainder for the 2008 tax year and
any subsequent tax year unless the rate prescr ibed by
subparagraph (h) of this paragraph is in effect, and
(h) 5.25% tax on the remainder for the 2009 and subsequent
tax years. The decrease in the top marginal
individual income tax rate otherwise authorized by
this subparagraph shall be contingent up on the
determination required to be made by the State Board
of Equalization pursuant to Section 2355.1A of this
title.
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C. Individuals. For all taxable years beginning on or after
January 1, 2016 2022, and for which the determination required
pursuant to Sections 4 and 5 of this act is made by the State Board
of Equalization, a tax is hereby imposed upon the Oklahoma taxable
income of every resident or nonresident individual, which tax shall
be computed as follows:
1. Single individuals and married indivi duals filing
separately:
(a) 1/2% 0.25% tax on first $1,000.00 or part thereof,
(b) 1% 0.75% tax on next $1,500.00 or part thereof,
(c) 2% 1.75% tax on next $1,250.00 or part thereof,
(d) 3% 2.75% tax on next $1,150.00 or part thereof,
(e) 4% 3.75% tax on next $2,300.00 or part thereof,
(f) 5% 4.75% tax on the remainder if the State Board of
Equalization makes a determination pursuant to Section
4 of this act or four and eighty -five hundredths
(4.85%) tax on the remainder if the State Board of
Equalization makes a determination pursuant to Section
5 of this act.
2. Married individuals filing jointly and surviving spouse to
the extent and in the manner that a surviving spouse is permitted to
file a joint return under the provisions of the Internal Revenue
Code and heads of households as defined in the Internal Revenue
Code:
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(a) 1/2% 0.25% tax on first $2,000.00 or part thereof,
(b) 1% 0.75% tax on next $3,000.00 or part thereof,
(c) 2% 1.75% tax on next $2,500.00 or part thereof,
(d) 3% 2.75% tax on next $2,300.00 or part thereof,
(e) 4% 3.75% tax on next $2,400.00 or part thereof,
(f) 5% 4.75% tax on the remainder if the State Board of
Equalization makes a determination pursuant to Section
4 of this act or four and eighty -five hundredths
percent (4.85%) tax o n the remainder if the State
Board of Equalization makes a determination pursuant
to Section 5 of this act .
No deduction for federal income taxes paid shall be allowed to
any taxpayer to arrive at taxable income.
D. Nonresident aliens. In lieu of the rat es set forth in
subsection A above, there shall be imposed on nonresident aliens, as
defined in the Internal Revenue Code, a tax of eight percent (8%)
instead of thirty percent (30%) as used in the Internal Revenue
Code, with respect to the Oklahoma taxabl e income of such
nonresident aliens as determined under the provision of the Oklahoma
Income Tax Act.
Every payer of amounts covered by this subsection shall deduct
and withhold from such amounts paid each payee an amount equal to
eight percent (8%) thereo f. Every payer required to deduct and
withhold taxes under this subsection shall for each quarterly period
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on or before the last day of the month following the close of each
such quarterly period, pay over the amount so withheld as taxes to
the Tax Commission, and shall file a return with each such payment.
Such return shall be in such form as the Tax Commission shall
prescribe. Every payer required under this subsection to deduct and
withhold a tax from a payee shall, as to the total amounts paid to
each payee during the calendar year, furnish to such payee, on or
before January 31, of the succeeding year, a written statement
showing the name of the payer, the name of the payee and the payee's
social security account number, if any, the total amount paid
subject to taxation, and the total amount deducted and withheld as
tax and such other information as the Tax Commission may require.
Any payer who fails to withhold or pay to the Tax Commission any
sums herein required to be withheld or paid shall be per sonally and
individually liable therefor to the State of Oklahoma.
E. Corporations. For all taxable years beginning after
December 31, 1989, a tax is hereby imposed upon the Oklahoma taxable
income of every corporation doing business within this state or
deriving income from sources within this state in an amount equal to
six percent (6%) thereof.
There shall be no additional Oklahoma income tax imposed on
accumulated taxable income or on undistributed personal holding
company income as those terms are de fined in the Internal Revenue
Code.
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F. Certain foreign corporations. In lieu of the tax imposed in
the first paragraph of subsection D of this section, for all taxable
years beginning after December 31, 1989, there shall be imposed on
foreign corporations, as defined in the Internal Revenue Code, a tax
of six percent (6%) instead of thirty percent (30%) as used in the
Internal Revenue Code, where such income is received from sources
within Oklahoma, in accordance with the provisions of the Internal
Revenue Code and the Oklahoma Income Tax Act.
Every payer of amounts covered by this subsection shall deduct
and withhold from such amounts paid each payee an amount equal to
six percent (6%) thereof. Every payer required to deduct and
withhold taxes under this subsection shall for each quarterly period
on or before the last day of the month following the close of each
such quarterly period, pay over the amount so withheld as taxes to
the Tax Commission, and shall file a return with each such payment.
Such return shall be in such form as the Tax Commission shall
prescribe. Every payer required under this subsection to deduct and
withhold a tax from a payee shall, as to the total amounts paid to
each payee during the calendar year, furnish to such payee, on or
before January 31, of the succeeding year, a written statement
showing the name of the payer, the name of the payee and the payee's
social security account number, if any, the total amounts paid
subject to taxation, the total amount deducted and withheld as tax
and such other information as the Tax Commission may require. Any
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payer who fails to withhold or pay to the Tax Commission any sums
herein required to be withheld or paid shall be personally and
individually liable therefor to the State of Oklahoma.
G. Fiduciaries. A tax is hereby imposed upon the Oklahoma
taxable income of every trust and estate at the same rates as are
provided in subsection B or C of this section for single
individuals. Fiduciaries are not allowed a deduction for any
federal income tax paid.
H. Tax rate tables. For all taxable years beginning after
December 31, 1991, in lieu of the tax imposed by subsection A, B or
C of this section, as applicable there is hereby imposed for each
taxable year on the taxable income of every indi vidual, whose
taxable income for such taxable year does not exceed the ceiling
amount, a tax determined under tables, applicable to such taxable
year which shall be prescribed by the Tax Commission and which shall
be in such form as it determines appropria te. In the table so
prescribed, the amounts of the tax shall be computed on the basis of
the rates prescribed by subsection A, B or C of this section. For
purposes of this subsection, the term "ceiling amount" means, with
respect to any taxpayer, the amo unt determined by the Tax Commission
for the tax rate category in which such taxpayer falls.
SECTION 2. AMENDATORY 68 O.S. 2011, Section 2357.43, as
amended by Section 1, Chapter 341, O.S.L. 2016 (68 O.S. Supp. 2020,
Section 2357.43), is amended to read as follows:
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Section 2357.43 For tax years beginning on or after December
31, 2001 January 1, 2022, there shall be allowed to a resident
individual or a part -year resident individual as a credit against
the tax imposed by Section 23 55 of this title five percent (5%) of
the earned income tax credit allowed under Section 32 of the
Internal Revenue Code of the United States, 26 U.S.C., Section 32 ,
which for the taxable year beginning January 1, 2022, and the
taxable year beginning each January 1 thereafter shall be computed
using the same requirements, other than the five percent (5%) amount
to compute the credit as prescribed by this section which shall
remain constant, in effect for computation of the earned income tax
credit for federal income tax purposes for the 2020 income tax year .
However, this credit shall not be paid in advance pursuant to the
provisions of Section 3507 of the Internal Revenue Code. For tax
years which begin before on or after January 1, 2016 2022, if the
credit exceeds the tax imposed by Section 2355 of this title, the
excess amount shall be refunded to the taxpayer. The maximum earned
income tax credit allowable on the Oklahoma income tax return shall
be prorated on the ratio that Oklahoma adjusted gross inc ome bears
to the federal adjusted gross income.
SECTION 3. This act shall become effective January 1, 2022.
58-1-8342 JM 05/17/21