An Act
ENROLLED HOUSE
BILL NO. 3418 By: Fetgatter of the House
and
Montgomery of the Senate
An Act relating to revenue and taxation; defining
terms; authorizing permanent full expensing for
certain properties; requiring conformity with
Internal Revenue Code; authorizing Tax Commission to
promulgate rules; and declaring an emergency.
SUBJECT: Revenue and taxation
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 2358.6A of Title 68, unless
there is created a duplication in numbering, reads as follows:
A. As used in this section:
1. "Internal Revenue Code " means Title 26 of the United States
Code also known as the federal Inte rnal Revenue Code of 1986, as
amended;
2. "Tax Cuts and Jobs Act " means Public Law No. 115-97 (115th
Congress Public Law 97);
3. "Qualified property" shall have the same meaning as in
Internal Revenue Code Section 168(k) as the Code existed on January
1, 2021, and shall apply to property placed in service after
December 31, 2021;
4. "Qualified improvement property " shall have the same meaning
as in Internal Revenue Code Section 168(e)(6 ) as the Code existed on ENR. H. B. NO. 3418 Page 2
January 1, 2021, and shall apply to prope rty placed in service after
December 31, 2021; and
5. "Full expensing" or "one hundred percent (100%) bonus
depreciation" means a method for taxpayers to recover costs for
certain expenditures in research and experimentation and depreciable
business assets by immediately deducting the full cost of such
expenditures in the tax year in which the cost is incurred or the
property is placed in service.
B. Taxpayers shall have the option for immediate and full
expensing for qualified property and qualifie d improvement property
as follows:
1. For purposes of computing income tax for tax able years
beginning after December 31, 2021, the cost of expenditures for
business assets that are qualified property or qualified improvement
property covered under Secti on 168 of the Internal Revenue Code
shall be eligible for one hundred percent (100%) bonus depreciation
and may be deducted as an expense incurred by the taxpayer during
the taxable year during which the property is placed in service,
notwithstanding any c hanges to federal law related to amortization
of cost recovery beginning on or after January 1, 2023, and shall
permanently remain fully and immediately deductible as an expense in
the tax year in which the property is placed in service for purposes
of calculating the taxpayer's income; and
2. The taxpayer's decision to recover investmen t costs through
immediate expensing in the year the investment cost is incurred, or
amortized over an amortiz ation schedule, is irrevocable unless
specifically allowed for by the Oklahoma Tax Commission .
C. 1. To conform to Section 179 of the Internal Re venue Code,
taxpayers shall be allowed to immediately deduct as an expense the
cost of certain depreciable bu siness assets in the tax year in which
the property is placed in service.
2. For purposes of computing income tax for taxable years
beginning after December 31, 2021, taxpayers may elect to treat the
cost of any Section 179 of the Internal Revenue Code property as an
expense which is not chargeable to the capital account. Any cost so
treated shall be allowed as a deduction for the taxable year in
which the Section 179 Internal Revenue Code property is placed in
service.
ENR. H. B. NO. 3418 Page 3
D. The Oklahoma Tax Commission shall, within sixty (60) days of
the effective date of this act, promulgate rules for implementation
of this act which shall conform to the Internal Revenue Code of 1986
and must be consistent with the Internal Revenue Service 's rules.
The provisions of this section shall supersede to the extent of any
inconsistency with any administrative rule.
SECTION 2. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is hereby
declared to exist, by re ason whereof this act shall take effect and
be in full force from and after its passage and approval.
ENR. H. B. NO. 3418 Page 4
Passed the House of Representatives the 20th day of May, 2022.
Presiding Officer of the House
of Representatives
Passed the Senate the 20th day of May, 2022.
Presiding Officer of the Senate
OFFICE OF THE GOVERNOR
Received by the Office of the Governor this ____________________
day of ___________________, 20_______, at _______ o'clock _______ M.
By: _________________________________
Approved by the Governor of the State of Oklahoma this _____ ____
day of ___________________, 20_______, at _______ o'clock _______ M.
_________________________________
Governor of the State of Oklahoma
OFFICE OF THE SECRETARY OF STATE
Received by the Office of the Secretary of State this __________
day of ___________________, 20_______, at _______ o'clock _______ M.
By: _________________________________