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Oklahoma House Bill HB2620

Oklahoma 2023 Regular Session

Oklahoma House Bill HB2620 Compare Versions

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2828 STATE OF OKLAHOMA
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3030 1st Session of the 59th Le gislature (2023)
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3232 HOUSE BILL 2620 By: Lepak
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3838 AS INTRODUCED
3939
4040 An Act relating to revenue and taxation; amending 68
4141 O.S. 2021, Section 2355, as amended by Section 45,
4242 Chapter 228, O.S.L. 2022 , (68 O.S. Supp. 2022,
4343 Section 2355), which relates to income tax rates;
4444 modifying income tax rates for individuals; amending
4545 68 O.S. 2021, Section 2358, as amended by Sec tion 2,
4646 Chapter 341, O.S.L. 2022 (68 O.S. Supp. 2022,
4747 Section 2358), which re lates to computation of
4848 Oklahoma adjusted gross income; modifying standard
4949 deduction amounts; and providing an effective date .
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5656 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
5757 SECTION 1. AMENDATORY 68 O.S. 2021, Section 2355, as
5858 amended by Section 45, Chapter 228, O.S.L. 2022 (68 O.S. Supp. 2022,
5959 Section 2355), is amended to read as follows:
6060 Section 2355. A. Individuals. For all taxable years beginning
6161 after December 31, 1998, and before January 1, 2006, a tax is hereby
6262 imposed upon the Oklahoma taxable income of every resident or
6363 nonresident individual, which tax shall be computed at the option of
6464 the taxpayer under one of the two following methods:
6565 1. METHOD 1.
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9292 a. Single individuals and married individuals filing
9393 separately not deducting federal income tax:
9494 (1) 1/2% tax on first $1,000.00 or part thereof,
9595 (2) 1% tax on next $1,500.00 or part thereof,
9696 (3) 2% tax on next $1,250.00 or part thereof,
9797 (4) 3% tax on next $1,150 .00 or part thereof,
9898 (5) 4% tax on next $1,300.00 or p art thereof,
9999 (6) 5% tax on next $1,50 0.00 or part thereof,
100100 (7) 6% tax on next $2,300.00 or part thereof, and
101101 (8) (a) for taxable years beginning after December
102102 31, 1998, and before January 1, 2002, 6.75 %
103103 tax on the remainder,
104104 (b) for taxable years beginnin g on or after
105105 January 1, 2002, and be fore January 1, 2004,
106106 7% tax on the remainder, and
107107 (c) for taxable years beginni ng on or after
108108 January 1, 2004, 6.65% tax on the remainde r.
109109 b. Married individuals fi ling jointly and surviving
110110 spouse to the extent and in the manner that a
111111 surviving spouse is permitted to file a joint return
112112 under the provisions of the Internal Revenue Code and
113113 heads of households as defined in the Internal Revenue
114114 Code not deducting fe deral income tax:
115115 (1) 1/2% tax on first $2,000.00 or p art thereof,
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142142 (2) 1% tax on next $3,00 0.00 or part thereof,
143143 (3) 2% tax on next $2,500.00 or part thereof,
144144 (4) 3% tax on next $2,300.00 or part thereof,
145145 (5) 4% tax on next $2,400.00 or part thereof,
146146 (6) 5% tax on next $2,800.00 or part thereof,
147147 (7) 6% tax on next $6,000.00 or part thereof, and
148148 (8) (a) for taxable years beginning after December
149149 31, 1998, and before January 1, 2002, 6.75%
150150 tax on the remainder,
151151 (b) for taxable years beginning on or after
152152 January 1, 2002, and before January 1, 2004,
153153 7% tax on the remainder, and
154154 (c) for taxable years beginning on or after
155155 January 1, 2004, 6.65% tax on the remainder.
156156 2. METHOD 2.
157157 a. Single individuals and married individu als filing
158158 separately deducting federal i ncome tax:
159159 (1) 1/2% tax on first $1,000.00 or part the reof,
160160 (2) 1% tax on next $1,500.00 or part thereof,
161161 (3) 2% tax on next $1,250.00 or part thereof,
162162 (4) 3% tax on next $1,150.00 or part thereof,
163163 (5) 4% tax on next $1,200.00 or part thereof,
164164 (6) 5% tax on next $1,400.00 or part thereof,
165165 (7) 6% tax on next $1,500.00 or part thereof,
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192192 (8) 7% tax on next $1,500.00 or part thereof,
193193 (9) 8% tax on next $2,000.00 or part thereof,
194194 (10) 9% tax on next $3,500.00 or part thereof, and
195195 (11) 10% tax on the remainder.
196196 b. Married individuals filing jointly and surviving
197197 spouse to the extent and in the manner th at a
198198 surviving spouse is permitted to file a joint return
199199 under the provisions of the Internal Revenue Code and
200200 heads of households as defined in the Internal Revenu e
201201 Code deducting federal income tax:
202202 (1) 1/2% tax on the first $2,000.00 or part thereof,
203203 (2) 1% tax on the next $3,000.00 or part thereof,
204204 (3) 2% tax on the next $2,500.00 or part thereof,
205205 (4) 3% tax on the next $1,400.00 or part thereof,
206206 (5) 4% tax on the next $1,500.00 or part thereof,
207207 (6) 5% tax on the next $1,600.00 or part thereof,
208208 (7) 6% tax on the next $1,250.00 or part thereof,
209209 (8) 7% tax on the next $1,750.00 or part thereof,
210210 (9) 8% tax on the next $3,000.00 or part thereof,
211211 (10) 9% tax on the next $6,000.00 or part thereof, and
212212 (11) 10% tax on the remainder.
213213 B. Individuals. For all taxable years beginning on or after
214214 January 1, 2008, and ending any tax year which begins after Decem ber
215215 31, 2015, for which the determination required pursuant to Se ctions
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242242 4 and 5 of this act is made by the State Board of Equalization, a
243243 tax is hereby imposed upon the Oklahoma taxable income of every
244244 resident or nonresident individual, which tax shall be computed as
245245 follows:
246246 1. Single individuals and married individu als filing
247247 separately:
248248 (a) 1/2% tax on first $1,000.00 or part thereof,
249249 (b) 1% tax on next $1,500.00 or part thereof,
250250 (c) 2% tax on next $1,250.00 or part thereof,
251251 (d) 3% tax on next $1,150.00 or part thereof,
252252 (e) 4% tax on next $2,300.00 or part thereof,
253253 (f) 5% tax on next $1,500.00 or part thereof,
254254 (g) 5.50% tax on the remainder for the 2008 t ax year and
255255 any subsequent tax year unless the rate prescribed by
256256 subparagraph (h) of this paragraph is in effect, and
257257 (h) 5.25% tax on the remainder for the 2009 an d subsequent
258258 tax years. The decrease in the top margi nal
259259 individual income tax rate otherw ise authorized by
260260 this subparagraph shall be contingent upon the
261261 determination required to be made by the State Board
262262 of Equalization pursuant to Section 2355.1A of this
263263 title.
264264 2. Married individuals filing jointly and surviving spouse to
265265 the extent and in the manner that a surviving spouse is permitted to
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292292 file a joint return under t he provisions of the Internal Revenue
293293 Code and heads of households as defined in the Internal Revenue
294294 Code:
295295 (a) 1/2% tax on first $2,000.00 or part thereof,
296296 (b) 1% tax on next $3,000.00 or part thereof,
297297 (c) 2% tax on next $2,500.00 or part thereof,
298298 (d) 3% tax on next $2,300.00 or part thereof,
299299 (e) 4% tax on next $2,400.00 or part thereof,
300300 (f) 5% tax on next $2,800.00 or part thereof,
301301 (g) 5.50% tax on the remainder for the 2008 t ax year and
302302 any subsequent tax year unless the rate prescribed by
303303 subparagraph (h) of this paragraph is in effect, and
304304 (h) 5.25% tax on the remainder for the 2009 an d subsequent
305305 tax years. The decrease in the top margi nal
306306 individual income tax rate otherw ise authorized by
307307 this subparagraph shall be contingent upon the
308308 determination required to be made by the State Board
309309 of Equalization pursuant to Section 2355.1A of this
310310 title.
311311 C. Individuals. For all taxable years begi nning on or after
312312 January 1, 2022, and ending not later than December 31, 2023, a tax
313313 is hereby imposed upon the Oklahom a taxable income of every resident
314314 or nonresident individual, which tax shall be computed as follows:
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341341 1. Single individuals and married individuals filing
342342 separately:
343343 (a) 0.25% tax on first $1,000.00 or part thereo f,
344344 (b) 0.75% tax on next $1,500.00 or part thereof,
345345 (c) 1.75% tax on next $1,250.00 or part thereof ,
346346 (d) 2.75% tax on next $1,150.00 or part thereof,
347347 (e) 3.75% tax on next $2,300.00 or part thereof,
348348 (f) 4.75% tax on the remainder.
349349 2. Married individuals filing jointly and surviving spouse to
350350 the extent and in the manner that a surviving spouse is permi tted to
351351 file a joint return under the provisions of the Internal Revenue
352352 Code and heads of households as defined in the I nternal Revenue
353353 Code:
354354 (a) 0.25% tax on first $2,000.00 or part thereof,
355355 (b) 0.75% tax on next $3,000.00 or part thereof,
356356 (c) 1.75% tax on next $2,500.00 or part thereof,
357357 (d) 2.75% tax on next $2,300.00 or part thereof,
358358 (e) 3.75% tax on next $2,400.00 or part thereof,
359359 (f) 4.75% tax on the remainder.
360360 No deduction for federal income taxes paid shall be allowed to
361361 any taxpayer to arrive at ta xable income.
362362 D. Individuals. For all taxable years beginning on or after
363363 January 1, 2024, a tax is hereby imposed upon the Oklahoma taxable
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390390 income of every resident or nonresident individual, which tax shall
391391 be computed as follows:
392392 1. Single individuals and married individuals filing separat ely
393393 at the rate of four and five-tenths percent (4.5%);
394394 2. Married individuals filing jointly and surviving spouse to
395395 the extent and in the manne r that a surviving spouse is permitted to
396396 file a joint return under the provisions of the Interna l Revenue
397397 Code and heads of households as defined in the Internal Revenue Code
398398 at the rate of four and five-tenths percent (4.5%).
399399 No deduction for federal income taxes paid shall be allowed to
400400 any taxpayer to arrive at taxable inco me.
401401 E. Nonresident aliens. In lieu of the rates set forth in
402402 subsection A, B, C, or D above, there shall be imposed on
403403 nonresident aliens, as defined in the Internal Revenue Code, a tax
404404 of eight percent (8%) instead of thirty percent (30%) as used in the
405405 Internal Revenue Code, with respect to the Oklahoma taxab le income
406406 of such nonresident aliens as determined under th e provision of the
407407 Oklahoma Income Tax Act.
408408 F. Every payer of amounts covered by this subsection shall
409409 deduct and withhold from such amounts paid each payee an amount
410410 equal to eight percent (8%) t hereof. Every payer required to deduct
411411 and withhold taxes unde r this subsection shall for each quarterly
412412 period on or before the last day of the month following the close of
413413 each such quarterly period, pay over the amount so withheld as taxes
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440440 to the Tax Commission, and shall file a return with each such
441441 payment. Such return shall be in such form as the Tax Commission
442442 shall prescribe. Every payer required under this subsection to
443443 deduct and withhold a tax from a payee shall, as to the total
444444 amounts paid to each payee during the calendar year, furnish to such
445445 payee, on or before January 31, of the succeeding year, a written
446446 statement showing the name of the payer, the name of the payee and
447447 the payee's Social Security account number, if any, the total amount
448448 paid subject to taxation, and the total amount deducted and wi thheld
449449 as tax and such other information as the Tax Commission may require.
450450 Any payer who fails to withhold or pay to the Tax Commission any
451451 sums herein required to be withheld or paid shall b e personally and
452452 individually liable therefor to the State of O klahoma.
453453 E. G. Corporations. For all taxable years beginning after
454454 December 31, 2021, a tax is hereby imposed upon the Oklahoma taxable
455455 income of every corporation doing business within this state or
456456 deriving income from sources within this state in an amount equal to
457457 four percent (4%) thereof.
458458 There shall be no additional Oklahoma income tax imposed on
459459 accumulated taxable income or on undistributed personal holding
460460 company income as those terms are defined in the Internal Revenue
461461 Code.
462462 F. H. Certain foreign corporatio ns. In lieu of the tax imposed
463463 in the first paragraph of subsection D F of this section, for all
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490490 taxable years beginning after December 31, 2021, there shall be
491491 imposed on foreign corporations, as defined in the Internal Revenue
492492 Code, a tax of four percent (4%) instead of thirty percent (30%) as
493493 used in the Internal Revenue Code, where such income is received
494494 from sources within Oklahoma, in accordanc e with the provisions of
495495 the Internal Revenue Code and the Oklahoma Income Tax Act.
496496 Every payer of amounts covered by this subsection shall deduct
497497 and withhold from such amounts paid each payee an amount equal to
498498 four percent (4%) thereof. Every payer required to deduct and
499499 withhold taxes under this subsection shall for eac h quarterly period
500500 on or before the last day of the month following the close of ea ch
501501 such quarterly period, pay over the amount so withheld as taxes to
502502 the Tax Commission, and shall file a return with each such pay ment.
503503 Such return shall be in such form as the Tax Commission shall
504504 prescribe. Every payer required under this subsection to deduct and
505505 withhold a tax from a payee shall, as to the total amounts paid to
506506 each payee during the calendar year, furnish to suc h payee, on or
507507 before January 31, of the succeeding year, a written statement
508508 showing the name of the payer, the name of the payee and the payee's
509509 Social Security account number, if any, the total amounts paid
510510 subject to taxation, the total amount deducted and withheld as tax
511511 and such other infor mation as the Tax Commission may require . Any
512512 payer who fails to withhold or pay t o the Tax Commission any sums
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539539 herein required to be withheld or paid shall be personal ly and
540540 individually liable therefor to the Sta te of Oklahoma.
541541 G. I. Fiduciaries. A tax is hereby imposed upon the Oklahoma
542542 taxable income of every trust and estate at the same rates as are
543543 provided in subsection B or, C or D of this section for single
544544 individuals. Fiduciaries are not allowed a dedu ction for any
545545 federal income tax paid.
546546 H. J. Tax rate tables. For all taxable years beginning after
547547 December 31, 1991, in lieu of th e tax imposed by subsection A, B or,
548548 C or D of this section, as applicable there is hereby imp osed for
549549 each taxable year on the taxable income of every individual, whose
550550 taxable income for such taxable year does not exceed the ceiling
551551 amount, a tax determined under tables, applicable to such taxable
552552 year which shall be prescribed by the Tax Commiss ion and which shall
553553 be in such form as it determines appropriate. In the table so
554554 prescribed, the amounts of the tax shall be computed on the ba sis of
555555 the rates prescribed by subsection A, B or, C or D of this section.
556556 For purposes of this subsection, the term "ceiling amount" means,
557557 with respect to any taxpayer, the amount determined by the Tax
558558 Commission for the tax rate category in which such taxpay er falls.
559559 SECTION 2. AMENDATORY 68 O.S. 2021, Section 2358, as
560560 amended by Section 2, Chapter 341, O.S.L. 20 22 (68 O.S. Supp. 2022,
561561 Section 2358), is amended to re ad as follows:
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588588 Section 2358. For all tax years beginning after December 31,
589589 1981, taxable income and a djusted gross income shall be adjusted to
590590 arrive at Oklahoma taxable income and Okla homa adjusted gross income
591591 as required by this section.
592592 A. The taxable income of any taxpa yer shall be adjusted to
593593 arrive at Oklahoma taxable inco me for corporations and O klahoma
594594 adjusted gross income for individuals, as foll ows:
595595 1. There shall be added interest income on obligations of any
596596 state or political subdivision thereto which is not o therwise
597597 exempted pursuant to other laws of this state, to the extent that
598598 such interest is not included in taxable income and adjusted gross
599599 income.
600600 2. There shall be deducted amounts included in such income that
601601 the state is prohibited from taxing becau se of the provisions of the
602602 Federal Constitution, the St ate Constitution, federal laws or laws
603603 of Oklahoma.
604604 3. The amount of any feder al net operating loss deductio n shall
605605 be adjusted as follows:
606606 a. For carryovers and carrybacks to taxable years
607607 beginning before January 1, 1981, the amount of any
608608 net operating loss deduction allowed t o a taxpayer for
609609 federal income tax purposes shall be reduced to an
610610 amount which is the same portion thereof as the loss
611611 from sources within this state, as determined pursuant
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638638 to this section and Section 2362 of this title, for
639639 the taxable year in which su ch loss is sustained is of
640640 the total loss for such yea r;
641641 b. For carryovers and carry backs to taxable years
642642 beginning after December 31, 1980, the amount of any
643643 net operating loss deduction allowed for the taxable
644644 year shall be an amount equal to the aggreg ate of the
645645 Oklahoma net operating loss carryovers and carrybacks
646646 to such year. Oklahoma net operating losses shall be
647647 separately determined by reference to Section 172 of
648648 the Internal Revenue Code, 26 U.S.C., Section 172, as
649649 modified by the Oklahoma Incom e Tax Act, Section 2351
650650 et seq. of this title, and sha ll be allowed without
651651 regard to the existence of a federal net operating
652652 loss. For tax years beginning after December 31 ,
653653 2000, and ending before January 1, 2008, the years to
654654 which such losses may be carried shall be determined
655655 solely by reference to Sec tion 172 of the Internal
656656 Revenue Code, 26 U.S.C., Section 172, with the
657657 exception that the terms "net operating loss" and
658658 "taxable income" shall be replaced with "Oklahoma net
659659 operating loss" and "Oklahoma taxable income". For
660660 tax years beginning after De cember 31, 2007, and
661661 ending before January 1, 2009, years to which such
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688688 losses may be carried back shall be limited to tw o (2)
689689 years. For tax years beginning after December 31,
690690 2008, the years to which such losses may be carried
691691 back shall be determined s olely by reference to
692692 Section 172 of the Internal Revenue Code, 26 U.S.C.,
693693 Section 172, with the exception that the terms "net
694694 operating loss" and "taxable income" shall be replaced
695695 with "Oklahoma net operating loss" and "Oklahoma
696696 taxable income".
697697 4. Items of the following nature shal l be allocated as
698698 indicated. Allowable deductions attributable to items separately
699699 allocable in subparagraphs a, b and c of this paragraph, whethe r or
700700 not such items of in come were actually received, shall be allocated
701701 on the same basis as those items:
702702 a. Income from real and tangible personal property, such
703703 as rents, oil and mining production or royalties, and
704704 gains or losses from sales of such pro perty, shall be
705705 allocated in accordance with the situs of such
706706 property;
707707 b. Income from intangible personal p roperty, such as
708708 interest, dividends, patent or copyright royalties,
709709 and gains or losses fr om sales of such property, shall
710710 be allocated in accorda nce with the domiciliary situs
711711 of the taxpayer, except that:
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738738 (1) where such property has acquired a nonunitar y
739739 business or commercial situs apart from the
740740 domicile of the taxpayer such income shall be
741741 allocated in accordance with such business or
742742 commercial situs; interest income from
743743 investments held to generate working capital for
744744 a unitary business enterprise shall be included
745745 in apportionable income; a resident trust or
746746 resident estate shall be tre ated as having a
747747 separate commercial or business situs i nsofar as
748748 undistributed income is concerned, but shall not
749749 be treated as having a separate commercial or
750750 business situs insofar as distributed income is
751751 concerned,
752752 (2) for taxable years beginning afte r December 31,
753753 2003, capital or ordinary gains or losses from
754754 the sale of an ownership interest in a publicly
755755 traded partnership, as de fined by Section 7704(b)
756756 of the Internal Revenue Code, shall be allocated
757757 to this state in the ratio of the original cost
758758 of such partnership's tangible property in this
759759 state to the original cost of su ch partnership's
760760 tangible property everywhere, as dete rmined at
761761 the time of the sale ; if more than fifty percent
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788788 (50%) of the value of the partnership's assets
789789 consists of intangible assets, capital or
790790 ordinary gains or losses from the sale of an
791791 ownership interest in the partnership shall be
792792 allocated to this state in accordance with the
793793 sales factor of the partnership for its first
794794 full tax period immediately preceding its ta x
795795 period during which the ownership interest in the
796796 partnership was sold; the pro visions of this
797797 division shall only apply if the capit al or
798798 ordinary gains or losses from the sale of an
799799 ownership interest in a partnership do not
800800 constitute qualifying gain receiving capital
801801 treatment as defined in subparagraph a of
802802 paragraph 2 of subsec tion F of this section,
803803 (3) income from such property which is required to be
804804 allocated pursuant to the provisions of paragraph
805805 5 of this subsection shall be allocated as here in
806806 provided;
807807 c. Net income or loss from a business activ ity which is
808808 not a part of business carried on within or without
809809 the state of a unitary character shall be se parately
810810 allocated to the state in which such activity is
811811 conducted;
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838838 d. In the case of a manufacturing or processing
839839 enterprise the business of whi ch in Oklahoma consists
840840 solely of marketing its products by:
841841 (1) sales having a situs without this state, shi pped
842842 directly to a point from without the state to a
843843 purchaser within the state, commonly known as
844844 interstate sales,
845845 (2) sales of the product store d in public warehouses
846846 within the state pursuant to "in transit"
847847 tariffs, as prescribed and allowed by the
848848 Interstate Commerce Commission, to a purchaser
849849 within the state,
850850 (3) sales of the product stored in public warehouses
851851 within the state where the ship ment to such
852852 warehouses is not covered by "in transit"
853853 tariffs, as prescribed a nd allowed by the
854854 Interstate Commerce Commission, to a purchaser
855855 within or without the state,
856856 the Oklahoma net income shall, at the option of the
857857 taxpayer, be that portion of th e total net income of
858858 the taxpayer for federal income tax purposes derived
859859 from the manufacture and/or proces sing and sales
860860 everywhere as determined by the ratio of the sales
861861 defined in this section made to the purchaser within
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888888 the state to the total sales everywhere. The term
889889 "public warehouse" as used in this subparagraph means
890890 a licensed public warehouse, the principal business of
891891 which is warehousing merchandise for the public;
892892 e. In the case of insurance companies, Oklahoma taxable
893893 income shall be taxable income of the taxpay er for
894894 federal tax purposes, as adjusted for the adjus tments
895895 provided pursuant to th e provisions of paragraphs 1
896896 and 2 of this subsection, apportioned as follows:
897897 (1) except as otherwise provided by division (2) of
898898 this subparagraph, taxable income of an i nsurance
899899 company for a taxable year shall be apportion ed
900900 to this state by multiplyin g such income by a
901901 fraction, the numerator of which is the direct
902902 premiums written for insurance on property or
903903 risks in this state, and the denomi nator of which
904904 is the direct premiums written for insurance on
905905 property or risks everywhere. For purposes of
906906 this subsection, the term "direct premiums
907907 written" means the total amount of direct
908908 premiums written, assessments and annuity
909909 considerations as reported for the taxable y ear
910910 on the annual statement filed by the company with
911911 the Insurance Commissioner in the form approved
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938938 by the National Association of Insurance
939939 Commissioners, or such other form as may be
940940 prescribed in lieu thereof,
941941 (2) if the principal source of premiums w ritten by an
942942 insurance company consists of premiums fo r
943943 reinsurance accepted by it, the taxable income of
944944 such company shall be apportioned to this state
945945 by multiplying such income by a fraction, the
946946 numerator of which is the sum o f (a) direct
947947 premiums written for insurance on property or
948948 risks in this state, plus (b) premiums written
949949 for reinsurance accepted in respect of property
950950 or risks in this state, and the denominator of
951951 which is the sum of (c) direct premiums written
952952 for insurance on property or ris ks everywhere,
953953 plus (d) premiums written for reinsuran ce
954954 accepted in respect of prop erty or risks
955955 everywhere. For purposes of this paragraph,
956956 premiums written for reinsurance accepted in
957957 respect of property or risks in this state,
958958 whether or not otherwise determinable, may at the
959959 election of the company be d etermined on the
960960 basis of the proportion which premiums written
961961 for insurance accepted from companies
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988988 commercially domiciled in Oklahoma bears to
989989 premiums written for reinsuranc e accepted from
990990 all sources, or alternatively in the proportion
991991 which the sum of the direct premiums written for
992992 insurance on property or risks in this state by
993993 each ceding company from which reinsurance is
994994 accepted bears to the sum of the total direct
995995 premiums written by each suc h ceding company for
996996 the taxable year.
997997 5. The net income or loss remaining after th e separate
998998 allocation in paragraph 4 of this subsection, being that which is
999999 derived from a unitary business enterprise, shall be apportioned to
10001000 this state on the basis of the arithmetical average of three factors
10011001 consisting of property, payroll and sales or gross revenue
10021002 enumerated as subparagraphs a, b and c of this paragraph. Net
10031003 income or loss as used in this paragraph includes that derived from
10041004 patent or copyright roya lties, purchase discounts, and interest on
10051005 accounts receivable relating to or arisin g from a business activity,
10061006 the income from which is apportioned pursuant to this subsection,
10071007 including the sale or other disposition of such prope rty and any
10081008 other property used in the unitary enterprise. Deductions used in
10091009 computing such net income or l oss shall not include taxes based on
10101010 or measured by income. Provided, for corporations whose property
10111011 for purposes of the tax imposed by Section 2 355 of this title has an
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10381038 initial investment cost equaling or exceeding Two Hund red Million
10391039 Dollars ($200,000,000.00) and such investment is made on or after
10401040 July 1, 1997, or for corporations which expand their property or
10411041 facilities in this state and such expansion has an investme nt cost
10421042 equaling or exceeding Two Hundred Million Doll ars ($200,000,000.00)
10431043 over a period not to exceed three (3) years, and such expansion is
10441044 commenced on or after January 1, 2000, the three factors shall be
10451045 apportioned with prope rty and payroll, each com prising twenty-five
10461046 percent (25%) of the apportionment factor and sales comprising f ifty
10471047 percent (50%) of the apportionment factor. The apportionment
10481048 factors shall be computed as follows:
10491049 a. The property factor is a fraction, the numerator of
10501050 which is the average value of the taxpayer's real and
10511051 tangible personal property owned or rented and used in
10521052 this state during the tax period and the denominator
10531053 of which is the average value of all the taxpayer's
10541054 real and tangible personal pr operty everywhere owned
10551055 or rented and used during the tax period.
10561056 (1) Property, the income from which is sepa rately
10571057 allocated in paragraph 4 of this subsection,
10581058 shall not be included in determining this
10591059 fraction. The numerator of the fraction shall
10601060 include a portion of the invest ment in
10611061 transportation and other equipment having no
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10881088 fixed situs, such as rolling st ock, buses, trucks
10891089 and trailers, including machinery and equipment
10901090 carried thereon, airplanes, salespersons'
10911091 automobiles and other similar equipmen t, in the
10921092 proportion that miles traveled in Oklahoma by
10931093 such equipment bears to total miles traveled,
10941094 (2) Property owned by the taxpayer is valued at its
10951095 original cost. Property rented by the taxpayer
10961096 is valued at eight times the net annual rental
10971097 rate. Net annual rental rate is the annual
10981098 rental rate paid by the taxpayer, less any annual
10991099 rental rate received b y the taxpayer from
11001100 subrentals,
11011101 (3) The average value of property shall be determined
11021102 by averaging the values at the beginning and
11031103 ending of the tax period but the Oklahoma Tax
11041104 Commission may require the averaging of monthly
11051105 values during the tax period if reasonably
11061106 required to reflect properly the average value of
11071107 the taxpayer's property;
11081108 b. The payroll factor is a fraction, the numerator of
11091109 which is the total compensation for services rendered
11101110 in the state during the tax per iod, and the
11111111 denominator of which is the total compensation for
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11381138 services rendered everywhere during the tax period.
11391139 "Compensation", as used in this subsection means those
11401140 paid-for services to the exten t related to the unitary
11411141 business but does not include officers' salaries,
11421142 wages and other compensation.
11431143 (1) In the case of a transportation enterprise, the
11441144 numerator of the fraction shall include a portion
11451145 of such expenditure in c onnection with employees
11461146 operating equipment over a fixed route, such as
11471147 railroad employees, airline pilots, or bus
11481148 drivers, in this state only a part of the time,
11491149 in the proportion that mileage traveled in
11501150 Oklahoma bears to total mileage traveled by such
11511151 employees,
11521152 (2) In any case the numerator of the fraction shall
11531153 include a portion of such expenditures in
11541154 connection with itinerant employees, such as
11551155 traveling salespersons, in this state only a part
11561156 of the time, in the proportion that time spent in
11571157 Oklahoma bears to total time sp ent in furtherance
11581158 of the enterprise by such employees ;
11591159 c. The sales factor is a fra ction, the numerator of which
11601160 is the total sales or gross revenue of the taxpayer in
11611161 this state during the tax period, and the denominator
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11881188 of which is the total sales or gr oss revenue of the
11891189 taxpayer everywhere during the tax period. "Sales",
11901190 as used in this subsection does not include sales or
11911191 gross revenue which are separately allocated in
11921192 paragraph 4 of this subsection.
11931193 (1) Sales of tangible pers onal property have a situ s
11941194 in this state if the property is delivered or
11951195 shipped to a purchaser other than th e United
11961196 States government, within this state regardless
11971197 of the FOB point or other conditions of the sale;
11981198 or the property is shipped from an offic e, store,
11991199 warehouse, factory or other place of storage in
12001200 this state and (a) th e purchaser is the United
12011201 States government or (b) the taxpayer is not
12021202 doing business in the state of the destination of
12031203 the shipment.
12041204 (2) In the case of a railroad or interurba n railway
12051205 enterprise, the numerator of the fraction shall
12061206 not be less than the allocation of revenues to
12071207 this state as shown in its annual report to the
12081208 Corporation Commission.
12091209 (3) In the case of an airline, truck or bus
12101210 enterprise or freight car, tank car , refrigerator
12111211 car or other railroad equipment enterprise, the
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12381238 numerator of the fraction shall include a port ion
12391239 of revenue from interstate transportation in the
12401240 proportion that interstate mileage traveled in
12411241 Oklahoma bears to total interstate mileage
12421242 traveled.
12431243 (4) In the case of an oil, gasoline or gas pipeline
12441244 enterprise, the numer ator of the fraction shall
12451245 be either the total of traffic units of the
12461246 enterprise within Oklahoma or the revenue
12471247 allocated to Oklahoma based upon miles moved, at
12481248 the option of the taxpayer, and the deno minator
12491249 of which shall be the total of traffic units o f
12501250 the enterprise or the revenu e of the enterprise
12511251 everywhere as appropriate to the numerator. A
12521252 "traffic unit" is hereby defined as the
12531253 transportation for a distance of one (1) mile of
12541254 one (1) barrel of oil, one (1) gallon of gasoline
12551255 or one thousand (1,0 00) cubic feet of natural or
12561256 casinghead gas, as the case may be.
12571257 (5) In the case of a telephone or telegraph or other
12581258 communication enterprise, the numerator of the
12591259 fraction shall include that portion o f the
12601260 interstate revenue as is allocated pursuant to
12611261 the accounting procedures presc ribed by the
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12881288 Federal Communications Commission; provided that
12891289 in respect to each corporation or business entity
12901290 required by the Federal Communicati ons Commission
12911291 to keep its books and records in accordance with
12921292 a uniform system of accounts prescribed by su ch
12931293 Commission, the intrastate net income shall be
12941294 determined separately in the manner provided by
12951295 such uniform system of accounts and only the
12961296 interstate income shall be su bject to allocation
12971297 pursuant to the provisions of this subsection.
12981298 Provided further, that the gross revenue factors
12991299 shall be those as are determined pursuant to the
13001300 accounting procedures prescribed by the Federal
13011301 Communications Commission.
13021302 In any case where the apportionment of the three factors
13031303 prescribed in this paragraph attributes to Oklahoma a portion of net
13041304 income of the enterprise out of all appropriate proportion to the
13051305 property owned and/or business transacted within this state, because
13061306 of the fact that one or more of the factors so prescribed are no t
13071307 employed to any appreciable extent in furtherance of the enterprise;
13081308 or because one or more factors not so prescribed are employed to a
13091309 considerable extent in furtherance of t he enterprise; or because of
13101310 other reasons, the Tax Commission is empowered to permit, after a
13111311 showing by taxpayer that an excessive portion of net income has been
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13381338 attributed to Oklahoma, or require, when in its judgment an
13391339 insufficient portion of net inco me has been attributed to Oklahoma,
13401340 the elimination, substitution, or use of ad ditional factors, or
13411341 reduction or increase in the weight of such prescribed factors.
13421342 Provided, however, that any such variance from such prescribed
13431343 factors which has the effect of increasing the portio n of net income
13441344 attributable to Oklahoma must not be i nherently arbitrary, and
13451345 application of the recomputed final apportionment to the net income
13461346 of the enterprise must attribute to Oklahoma only a reasonable
13471347 portion thereof.
13481348 6. For calendar years 1997 a nd 1998, the owner of a new or
13491349 expanded agricultural c ommodity processing facility i n this state
13501350 may exclude from Oklahoma taxable income, or in the case of an
13511351 individual, the Oklahoma adjusted gross income, fifteen percent
13521352 (15%) of the investment by the o wner in the new or expanded
13531353 agricultural commodity pro cessing facility. For calendar year 1999,
13541354 and all subsequent years, the percentage, not to exceed fifteen
13551355 percent (15%), available to the owner of a new or expanded
13561356 agricultural commodity processing fa cility in this state claiming
13571357 the exemption shall be a djusted annually so that the t otal estimated
13581358 reduction in tax liability does not exceed One Million Dollars
13591359 ($1,000,000.00) annually. The Tax Commission shall promulgate rules
13601360 for determining the perce ntage of the investment which each eligible
13611361 taxpayer may exclude. The exclusion provided by this paragraph
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13881388 shall be taken in the taxable year when the investment is made. In
13891389 the event the total reduction in tax liability authoriz ed by this
13901390 paragraph exceeds One Million Dollars ($1,000,000.00) in any
13911391 calendar year, the Tax Commission sha ll permit any excess over One
13921392 Million Dollars ($1,000,000.00) and shall factor such excess into
13931393 the percentage for subsequent years . Any amount of the exemption
13941394 permitted to be excluded pursuant to the provisions of this
13951395 paragraph but not used in any year may be carried forward as an
13961396 exemption from income pursuant to the provisions of this paragraph
13971397 for a period not exceeding six (6) years following the year in which
13981398 the investment was originally made.
13991399 For purposes of this par agraph:
14001400 a. "Agricultural commodity processing facility" means
14011401 building, structures, fixtures and improvements used
14021402 or operated primarily for the processing or production
14031403 of marketable products from agri cultural commodities.
14041404 The term shall also mean a dair y operation that
14051405 requires a depreciable investment of at least Two
14061406 Hundred Fifty Thousand Dollars ($250,000.00) and which
14071407 produces milk from dairy cows. The term does not
14081408 include a facility that provid es only, and nothing
14091409 more than, storage, cleaning, dry ing or transportation
14101410 of agricultural commodities, and
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14371437 b. "Facility" means each part of the facility which is
14381438 used in a process primarily for:
14391439 (1) the processing of agricultural commodities,
14401440 including receiving or storing agricultural
14411441 commodities, or the p roduction of milk at a dairy
14421442 operation,
14431443 (2) transporting the agricultural commodities or
14441444 product before, during or after the processing,
14451445 or
14461446 (3) packaging or otherwise preparing the product for
14471447 sale or shipment.
14481448 7. Despite any provision to the contrary in paragraph 3 of this
14491449 subsection, for taxable years beginning after December 31, 1999, in
14501450 the case of a taxpayer which has a farming loss, such farming loss
14511451 shall be considered a net operating loss carryb ack in accordance
14521452 with and to the extent of the Intern al Revenue Code, 26 U.S.C .,
14531453 Section 172(b)(G). However, the amount of the net operating loss
14541454 carryback shall not exceed the lesser of:
14551455 a. Sixty Thousand Dollars ($60,000.00), o r
14561456 b. the loss properly sh own on Schedule F of the Internal
14571457 Revenue Service Form 1040 reduced by one-half (1/2) of
14581458 the income from all other sources other than reflected
14591459 on Schedule F.
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14861486 8. In taxable years beginning after December 31, 1995, all
14871487 qualified wages equal to the federal income tax credit set forth in
14881488 26 U.S.C.A., Section 45 A, shall be deducted f rom taxable income.
14891489 The deduction allowed pursuant to this paragraph shall only be
14901490 permitted for the tax years in which the federal tax credit pursuant
14911491 to 26 U.S.C.A., Section 45A , is allowed. For purposes of this
14921492 paragraph, "qualified wages" means those wages used to calculate the
14931493 federal credit pursuant to 26 U.S.C.A., Section 45A.
14941494 9. In taxable years beginning after December 31, 2005, an
14951495 employer that is eligible for and utili zes the Safety Pays OSHA
14961496 Consultation Service provided by the Oklahoma Depa rtment of Labor
14971497 shall receive an exemption from taxable income in the amount of One
14981498 Thousand Dollars ($1,000.00) for the tax year that the service is
14991499 utilized.
15001500 10. For taxable years beginning on or after January 1, 2010,
15011501 there shall be added to Oklahoma taxable income an amount equal to
15021502 the amount of deferred income not included in such taxable income
15031503 pursuant to Section 108(i)(1) of the Internal Revenue Cod e of 1986
15041504 as amended by Section 1231 of the American Recovery and Reinvestment
15051505 Act of 2009 (P.L. No . 111-5). There shall be subtracted from
15061506 Oklahoma taxable income an amount equal to the amount of de ferred
15071507 income included in such taxable income pursuant t o Section 108(i)(1)
15081508 of the Internal Revenue Code by Section 1231 of the America n
15091509 Recovery and Reinvestment Act of 2009 (P.L. No. 111-5).
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15361536 11. For taxable years beginning on or after January 1, 2019,
15371537 there shall be subtracted from Oklahoma taxable income or adjusted
15381538 gross income any item of income or gain, and there shall be added to
15391539 Oklahoma taxable income or adjusted gross income any item of loss or
15401540 deduction that in the absence of an election pursuan t to the
15411541 provisions of the Pass-Through Entity Tax Equit y Act of 2019 would
15421542 be allocated to a member or to an indirect member of an ele cting
15431543 pass-through entity pursuant to Section 2351 et seq. of this title,
15441544 if (i) the electing pass-through entity has acc ounted for such item
15451545 in computing its Oklahoma net entit y income or loss pursuant to the
15461546 provisions of the Pass-Through Entity Tax Equi ty Act of 2019, and
15471547 (ii) the total amount of tax attributable to any resulting Oklahoma
15481548 net entity income has been paid . The Oklahoma Tax Commission shall
15491549 promulgate rules for the reporting of such exc lusion to direct and
15501550 indirect members of the electing pass-through entity. As used in
15511551 this paragraph, "electing pass-through entity", "indirect member",
15521552 and "member" shall be defined in the same manner as prescribed by
15531553 Section 2355.1P-2 of this title. Notwithstanding the application of
15541554 this paragraph, the a djusted tax basis of any ownership interest in
15551555 a pass-through entity for purposes of Section 2351 et seq. of this
15561556 title shall be equal to its adjusted tax basis for federal inco me
15571557 tax purposes.
15581558 B. 1. The taxable income of any corporation shall be further
15591559 adjusted to arrive at Oklahoma taxable income, except those
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15861586 corporations electing treatment as provided in subchapter S of the
15871587 Internal Revenue Code, 26 U.S.C., Section 1361 et seq., and Section
15881588 2365 of this title, deductions pursuant to the provisions of the
15891589 Accelerated Cost Recovery System as defined and allowed in the
15901590 Economic Recovery Tax Act of 1981, Public Law 97-34, 26 U.S.C.,
15911591 Section 168, for depreciation of assets place d into service after
15921592 December 31, 1981, shall not be allowed in calculating Okl ahoma
15931593 taxable income. Such corporations shall be allowed a deduction for
15941594 depreciation of assets placed into service afte r December 31, 1981,
15951595 in accordance with provisions of th e Internal Revenue Code, 26
15961596 U.S.C., Section 1 et seq., in effect immediately pr ior to the
15971597 enactment of the Accelerated Cost Recovery System. The Oklahoma tax
15981598 basis for all such assets placed into ser vice after December 31,
15991599 1981, calculated in this section shall be retained and ut ilized for
16001600 all Oklahoma income tax purposes through th e final disposition of
16011601 such assets.
16021602 Notwithstanding any other provisions of the Oklahoma Income Tax
16031603 Act, Section 2351 et seq. of this title, or of the Internal Revenue
16041604 Code to the contrary, this subsect ion shall control calculation of
16051605 depreciation of asset s placed into service after December 31, 1981,
16061606 and before January 1, 1983.
16071607 For assets placed in service and held by a cor poration in which
16081608 accelerated cost recovery system was p reviously disallowed, an
16091609 adjustment to taxable income is required in the first taxable year
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16361636 beginning after December 31, 1982, to reconcile the basis of such
16371637 assets to the basis allowed in the Interna l Revenue Code. The
16381638 purpose of this adjustment is to eq ualize the basis and allo wance
16391639 for depreciation accounts between that reported to the Internal
16401640 Revenue Service and that reported to Oklahoma.
16411641 2. For tax years beginning on or after January 1, 2009, a nd
16421642 ending on or before December 31, 2009, there shall be added to
16431643 Oklahoma taxable income any amount in excess of One Hundred Seventy -
16441644 five Thousand Dollars ($175,000.00) which has been deducted as a
16451645 small business expense under Internal Revenue Code, Secti on 179 as
16461646 provided in the American Recovery and Reinvest ment Act of 2009.
16471647 C. 1. For taxable years beginning after December 31, 1987, the
16481648 taxable income of any corporation shall be further adjusted to
16491649 arrive at Oklahoma taxable income for transfers of tec hnology to
16501650 qualified small businesses located in Oklahom a. Such transferor
16511651 corporation shall be allowed an exemption from taxable inco me of an
16521652 amount equal to the amount of royalty payment received as a result
16531653 of such transfer; provided, however, such amo unt shall not exceed
16541654 ten percent (10%) of the amount of gross proceeds received b y such
16551655 transferor corporation as a result of the techn ology transfer. Such
16561656 exemption shall be allowed for a period not to exceed ten (10) years
16571657 from the date of receipt of th e first royalty payment accruing from
16581658 such transfer. No exemption may be claimed for transfers of
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16851685 technology to qualified small busine sses made prior to January 1,
16861686 1988.
16871687 2. For purposes of this subsection:
16881688 a. "Qualified small business" means an entity, whether
16891689 organized as a corporation, partnership, or
16901690 proprietorship, organized for profit with its
16911691 principal place of business located wi thin this state
16921692 and which meets the following criteria:
16931693 (1) Capitalization of not more than Two Hundred Fifty
16941694 Thousand Dollars ($250,000.00),
16951695 (2) Having at least fifty percent ( 50%) of its
16961696 employees and assets located in Oklahoma at the
16971697 time of the transfer, and
16981698 (3) Not a subsidiary or affiliate of the transferor
16991699 corporation;
17001700 b. "Technology" means a proprietary process, form ula,
17011701 pattern, device or compilation of scientific or
17021702 technical information which is not in the public
17031703 domain;
17041704 c. "Transferor corporatio n" means a corporation which is
17051705 the exclusive and undisputed owner of the technology
17061706 at the time the transfer is made; an d
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17331733 d. "Gross proceeds" means the total amount of
17341734 consideration for the transfer of technology, whether
17351735 the consideration is in money or otherwise.
17361736 D. 1. For taxable years beginning after December 31, 2005, the
17371737 taxable income of any corporation, estate or trust, shall be further
17381738 adjusted for qualifying gains re ceiving capital treatment . Such
17391739 corporations, estates or trusts shall be allow ed a deduction from
17401740 Oklahoma taxable income for the amount of qualifying gains receiving
17411741 capital treatment earned by the corporation, estate or trust during
17421742 the taxable year and included in the federal taxable income of such
17431743 corporation, estate or trust.
17441744 2. As used in this subsection:
17451745 a. "qualifying gains receiving capital treatment" means
17461746 the amount of net capital gains, a s defined in Section
17471747 1222(11) of the Internal Revenue Co de, included in the
17481748 federal income tax return of the corporation, estate
17491749 or trust that result from:
17501750 (1) the sale of real property or tangible personal
17511751 property located within Oklahoma that has been
17521752 directly or indirectly owned by the corporation,
17531753 estate or trust for a holding peri od of at least
17541754 five (5) years prior to the date of the
17551755 transaction from which such net capital gains
17561756 arise,
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17831783 (2) the sale of stock or on the sale of an ownership
17841784 interest in an Oklahoma company, limited
17851785 liability company, or partner ship where such
17861786 stock or ownership interest has been directly or
17871787 indirectly owned by the corporation, estate or
17881788 trust for a holding period of at least three (3)
17891789 years prior to the date of the transact ion from
17901790 which the net capital gains arise, or
17911791 (3) the sale of real property, tan gible personal
17921792 property or intangible personal propert y located
17931793 within Oklahoma as part of the sale of all or
17941794 substantially all of the assets of an Oklahoma
17951795 company, limited liability company, or
17961796 partnership where such property has been directly
17971797 or indirectly owned by such entity owned by the
17981798 owners of such entity, and used in or derived
17991799 from such entity for a period of at least three
18001800 (3) years prior to the date of the transact ion
18011801 from which the net capital gains arise,
18021802 b. "holding period" means an uninterrupted period of
18031803 time. The holding period shall inclu de any additional
18041804 period when the property was held by another
18051805 individual or entity, if such additional period is
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18321832 included in the taxpayer's holding period for the
18331833 asset pursuant to the Internal Revenue Code,
18341834 c. "Oklahoma company", "limited liability comp any", or
18351835 "partnership" means an entity whose primary
18361836 headquarters have been located in Oklahoma for at
18371837 least three (3) unin terrupted years prior to the date
18381838 of the transaction fro m which the net capital g ains
18391839 arise,
18401840 d. "direct" means the taxpayer directly owns the asset,
18411841 and
18421842 e. "indirect" means the taxpayer owns an interest in a
18431843 pass-through entity (or chain of pass-through
18441844 entities) that sells the asset that gives rise to the
18451845 qualifying gains receiving ca pital treatment.
18461846 (1) With respect to sales of rea l property or
18471847 tangible personal pro perty located within
18481848 Oklahoma, the deduction described in this
18491849 subsection shall not apply u nless the pass-
18501850 through entity that makes the sale has he ld the
18511851 property for not less than five (5) uninterrupted
18521852 years prior to the date of the transaction that
18531853 created the capital gain, and each pass-through
18541854 entity included in the chain of ownership has
18551855 been a member, partner, or shareholder of the
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18821882 pass-through entity in the tier imme diately below
18831883 it for an uninterrupted period of n ot less than
18841884 five (5) years.
18851885 (2) With respect to sales of stock or ownership
18861886 interest in or sales of all or substantially all
18871887 of the assets of an Oklahoma company, limited
18881888 liability company, or partnership, the deduction
18891889 described in this subsection shall not apply
18901890 unless the pass-through entity that makes the
18911891 sale has held the stock or ownership interest or
18921892 the assets for not le ss than three (3)
18931893 uninterrupted years prior to the date of the
18941894 transaction that created the capital gain, and
18951895 each pass-through entity included in the chain of
18961896 ownership has been a member, partner or
18971897 shareholder of the pass-through entity in the
18981898 tier immediately below it for an uninterrupted
18991899 period of not less than three (3) years.
19001900 E. The Oklahoma adjusted gross income of any individual
19011901 taxpayer shall be further adju sted as follows to arrive at Oklahoma
19021902 taxable income:
19031903 1. a. In the case of individuals, the re shall be added or
19041904 deducted, as the case may be, the d ifference necessary
19051905 to allow personal exemptions of One Thousand Dollars
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19321932 ($1,000.00) in lieu of the personal exemptions allowed
19331933 by the Internal Revenue Code.
19341934 b. There shall be allowed an additional ex emption of One
19351935 Thousand Dollars ($1,000.00) for each tax payer or
19361936 spouse who is blind at the close of the tax year. For
19371937 purposes of this subparagraph, an individual is blind
19381938 only if the central visual acuity of the individual
19391939 does not exceed 20/200 in the better eye with
19401940 correcting lenses, or if the visual acui ty of the
19411941 individual is greater than 20/200, but is accompanied
19421942 by a limitation in the fields of vision such that the
19431943 widest diameter of the visual field subtends an angle
19441944 no greater than twenty (20) degrees.
19451945 c. There shall be allowed an additional exempti on of One
19461946 Thousand Dollars ($1,000.00) for each taxpayer or
19471947 spouse who is sixty-five (65) years of age or old er at
19481948 the close of the tax year based upon the filing status
19491949 and federal adjusted gross inc ome of the taxpayer.
19501950 Taxpayers with the following filin g status may claim
19511951 this exemption if the federal adjusted gross income
19521952 does not exceed:
19531953 (1) Twenty-five Thousand Dollars ($25,000.00) if
19541954 married and filing jointly;
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19811981 (2) Twelve Thousand Five Hundred Do llars ($12,500.00)
19821982 if married and filing separately;
19831983 (3) Fifteen Thousand Dollars ($15,000.00) if single;
19841984 and
19851985 (4) Nineteen Thousand Dollars ($19,000.00) if a
19861986 qualifying head of household.
19871987 Provided, for taxable years beginning after December
19881988 31, 1999, amounts included in the calculation of
19891989 federal adjusted gross income pursuant to the
19901990 conversion of a traditional individual retirement
19911991 account to a Roth individual retire ment account shall
19921992 be excluded from federal adjusted gross income for
19931993 purposes of the incom e thresholds provided in this
19941994 subparagraph.
19951995 2. a. For taxable years beginning on or before December 31,
19961996 2005, in the case of individuals who use the standard
19971997 deduction in determining taxable income, there shall
19981998 be added or deducted, as the case may be, the
19991999 difference necessary to allow a standard deduction in
20002000 lieu of the standard dedu ction allowed by the Internal
20012001 Revenue Code, in an amount equal to the larger of
20022002 fifteen percent (15%) of the Oklahoma adjusted gross
20032003 income or One Thousand Dollars ($1,000.00), but not to
20042004 exceed Two Thousand Dollars ($2,000.00), exc ept that
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20312031 in the case of a married individual filing a separate
20322032 return such deduction shall be the larger of f ifteen
20332033 percent (15%) of such Oklahoma adjusted gross income
20342034 or Five Hundred Dollars ($500.0 0), but not to exceed
20352035 the maximum amount of One Thousand Dollars
20362036 ($1,000.00).
20372037 b. For taxable years beginning on or after January 1,
20382038 2006, and before January 1, 2007, in the case of
20392039 individuals who use the standard deduction in
20402040 determining taxable income, t here shall be added or
20412041 deducted, as the case may be, the difference necessary
20422042 to allow a standard deduction in lieu of the standard
20432043 deduction allowed by the Internal Revenue Code, in an
20442044 amount equal to:
20452045 (1) Three Thousand Dollars ($3,000.00), if the filing
20462046 status is married filing joint, head of household
20472047 or qualifying widow; or
20482048 (2) Two Thousand Dollars ($2,000.00), if the filing
20492049 status is single or married filing sep arate.
20502050 c. For the taxable year beginning on January 1, 2007, and
20512051 ending December 31, 2007, in the case of individuals
20522052 who use the standard deductio n in determining taxable
20532053 income, there shall be added or deducted, as the case
20542054 may be, the difference necessa ry to allow a standard
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20812081 deduction in lieu of the standard deduction allowed by
20822082 the Internal Revenue Code, in an amount equal to:
20832083 (1) Five Thousand Five Hundred Dollars ($5, 500.00),
20842084 if the filing status is married filing joint or
20852085 qualifying widow; or
20862086 (2) Four Thousand One Hundred Twenty-five Dollars
20872087 ($4,125.00) for a head of household; or
20882088 (3) Two Thousand Seven Hundred Fifty Dollars
20892089 ($2,750.00), if the filing status is single or
20902090 married filing separate.
20912091 d. For the taxable year beginning on January 1, 2008, an d
20922092 ending December 31, 2008, in the case of individuals
20932093 who use the standard deduction in de termining taxable
20942094 income, there shall be added or deduct ed, as the case
20952095 may be, the difference necessary to allow a standard
20962096 deduction in lieu of the standard deduct ion allowed by
20972097 the Internal Revenue Code, in an amount equal to:
20982098 (1) Six Thousand Five Hund red Dollars ($6,500.00), if
20992099 the filing status is married filing joint or
21002100 qualifying widow, or
21012101 (2) Four Thousand Eight Hundred Seventy-five Dollars
21022102 ($4,875.00) for a head of household, or
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21292129 (3) Three Thousand Two Hundred Fifty Dollars
21302130 ($3,250.00), if the fili ng status is single or
21312131 married filing separate.
21322132 e. For the taxable year beginnin g on January 1, 2009, and
21332133 ending December 31, 2009, in the case of individuals
21342134 who use the standard deduction in determining taxable
21352135 income, there shall be added or deducted, a s the case
21362136 may be, the difference necessary to allow a s tandard
21372137 deduction in lieu of the standard deduction allowed by
21382138 the Internal Revenue Code, in an amount equal to:
21392139 (1) Eight Thousand Five Hundred Dollars ($8,500.00),
21402140 if the filing status is married fi ling joint or
21412141 qualifying widow, or
21422142 (2) Six Thousand Three Hundred Seventy-five Dollars
21432143 ($6,375.00) for a head of household, or
21442144 (3) Four Thousand Two Hundred Fifty Do llars
21452145 ($4,250.00), if the filing status is single or
21462146 married filing separate.
21472147 Oklahoma adjusted gross income shall be increased by
21482148 any amounts paid for motor vehicle excis e taxes which
21492149 were deducted as allowed by the Internal Revenue Code.
21502150 f. For taxable years beginning on or after January 1,
21512151 2010, and ending on December 31, 2016, in the case of
21522152 individuals who use the standard deduction in
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21792179 determining taxable income, there shall be added or
21802180 deducted, as the case may be, the difference necessary
21812181 to allow a standard deduction equal to the standard
21822182 deduction allowed by the Internal Revenue Code, ba sed
21832183 upon the amount and filing status prescribed by such
21842184 Code for purposes of fi ling federal individual income
21852185 tax returns.
21862186 g. For taxable years beginning on or afte r January 1,
21872187 2017, and ending not later than December 31, 2023, in
21882188 the case of individuals who use the standard deduction
21892189 in determining taxable income, there shall be add ed or
21902190 deducted, as the case may be, the difference necessary
21912191 to allow a standard deduction in lieu of the standard
21922192 deduction allowed by the Internal Revenue Code, as
21932193 follows:
21942194 (1) Six Thousand Three Hundred Fifty Dollars
21952195 ($6,350.00) for single or married fi ling
21962196 separately,
21972197 (2) Twelve Thousand Seven Hundred Dollars
21982198 ($12,700.00) for married filing jointly or
21992199 qualifying widower with dependent child, and
22002200 (3) Nine Thousand Three Hundred Fifty Dollars
22012201 ($9,350.00) for head of hous ehold.
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22282228 h. For taxable years beginning on or after January 1,
22292229 2024, in the case of individuals who use the standard
22302230 deduction in determining taxable income, there shall
22312231 be added or deducted, as the case may be, the
22322232 difference necessary to allow a standard deduction in
22332233 lieu of the standard deduction allowed by the Internal
22342234 Revenue Code, as follows:
22352235 (1) Six Thousand Three Hundred Fifty Dollars
22362236 ($6,350.00) for single or married filing
22372237 separately,
22382238 (2) Ten Thousand Three Hundred Fifty Dollars
22392239 ($10,350.00) for married filing jointly or
22402240 qualifying widower with dependent child, and
22412241 (3) Eight Thousand Three Hundred Fifty Dollars
22422242 ($8,350.00) for head of household.
22432243 3. a. In the case of resident and p art-year resident
22442244 individuals having adjusted gross income from sources
22452245 both within and witho ut the state, the itemized or
22462246 standard deductions and personal exemptio ns shall be
22472247 reduced to an amount which is the same portion of the
22482248 total thereof as Oklahoma adjusted gross income is of
22492249 adjusted gross income. To the extent itemized
22502250 deductions include allowable moving expense, proration
22512251 of moving expense shall not be req uired or permitted
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22782278 but allowable moving expense shall be fully deductible
22792279 for those taxpayers moving within or into Oklahoma and
22802280 no part of moving expense shall be deductible for
22812281 those taxpayers moving without or out of Oklahoma.
22822282 All other itemized or sta ndard deductions and personal
22832283 exemptions shall be subject to proration as provided
22842284 by law.
22852285 b. For taxable years beginning on or after January 1,
22862286 2018, the net amount of itemized deducti ons allowable
22872287 on an Oklahoma income tax return, subject to the
22882288 provisions of paragraph 24 of this subsection, shall
22892289 not exceed Seventeen Thousand Dollars ($17,000. 00).
22902290 For purposes of this subparagraph, charitable
22912291 contributions and medical expenses deduct ible for
22922292 federal income tax purposes shall be excluded from the
22932293 amount of Seventeen Thousand Dollars ($17,000.00) as
22942294 specified by this subparagraph.
22952295 4. A resident individual with a physical disability
22962296 constituting a substantial handicap to employment may deduct from
22972297 Oklahoma adjusted gross income such expenditures to modify a motor
22982298 vehicle, home or workplace as are necessary to compensate for his or
22992299 her handicap. A veteran certified by the Department of Veterans
23002300 Affairs of the federal government as having a service-connected
23012301 disability shall be conclusively presumed to be an individual with a
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23282328 physical disability constituting a substantial handicap to
23292329 employment. The Tax Commission shall promulgate rules containing a
23302330 list of combinations of common disabili ties and modifications which
23312331 may be presumed to qualify for this deduct ion. The Tax Commission
23322332 shall prescribe necessary requirements for verification.
23332333 5. a. Before July 1, 2010, the first One Thousand Five
23342334 Hundred Dollars ($1,500.00) received by any pers on
23352335 from the United States as salary or compensation in
23362336 any form, other than retirement benefits, as a member
23372337 of any component of the Armed Forces of the United
23382338 States shall be deducted from taxable income.
23392339 b. On or after July 1, 2010, one hundred percent ( 100%)
23402340 of the income received by any person from the United
23412341 States as salary or compensation in any form, other
23422342 than retirement benefits, as a member of any compone nt
23432343 of the Armed Forces of the United States shall be
23442344 deducted from taxable income.
23452345 c. Whenever the filing of a timely income tax return by a
23462346 member of the Armed For ces of the United States is
23472347 made impracticable or impossible of accomplishment by
23482348 reason of:
23492349 (1) absence from the United States, which term
23502350 includes only the states and the District of
23512351 Columbia;
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23782378 (2) absence from the State of Oklahoma while on
23792379 active duty; or
23802380 (3) confinement in a hospital within the United
23812381 States for treatment of wounds, injuries or
23822382 disease,
23832383 the time for filing a return and paying an income tax
23842384 shall be and is hereby exte nded without incurring
23852385 liability for interest or penalties, to the fift eenth
23862386 day of the third month following the month in which:
23872387 (a) Such individual shall return to the United
23882388 States if the extension is granted pursuant
23892389 to subparagraph a of this paragraph , return
23902390 to the State of Oklahoma if the extension is
23912391 granted pursuant to subparagraph b of this
23922392 paragraph or be discharged from such
23932393 hospital if the extension is granted
23942394 pursuant to subparagraph c of this
23952395 paragraph; or
23962396 (b) An executor, administrator, or c onservator
23972397 of the estate of the taxpayer is appointed,
23982398 whichever event occurs the earliest.
23992399 Provided, that the Tax Commission may, in its discretion, grant
24002400 any member of the Armed Forces of the United States an extension of
24012401 time for filing of income tax re turns and payment of income tax
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24282428 without incurring liabilities for inter est or penalties. Such
24292429 extension may be granted only when in the judgment of the Tax
24302430 Commission a good cause exists therefor and may be for a period in
24312431 excess of six (6) months . A record of every such extension granted,
24322432 and the reason therefor, shall be kept.
24332433 6. Before July 1, 2010, the salary or any other form of
24342434 compensation, received from t he United States by a member of any
24352435 component of the Armed Forces of the United States, shall be
24362436 deducted from taxable income during the time in which the person is
24372437 detained by the enemy in a conflict, is a prisoner of war or is
24382438 missing in action and not deceased; provided, after July 1, 2010,
24392439 all such salary or compensation shall be subject to th e deduction as
24402440 provided pursuant to paragraph 5 of this subsection.
24412441 7. a. An individual taxpayer, whether resident or
24422442 nonresident, may deduct an amount equal to th e federal
24432443 income taxes paid by the taxpayer during the taxable
24442444 year.
24452445 b. Federal taxes as desc ribed in subparagraph a of this
24462446 paragraph shall be deductible by any in dividual
24472447 taxpayer, whether resident or nonresident, only to the
24482448 extent they relate to income subject to taxation
24492449 pursuant to the provisions of the Oklahoma Income Tax
24502450 Act. The maximum amount allowable in the preceding
24512451 paragraph shall be prorated on the ra tio of the
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24782478 Oklahoma adjusted gross income to federal adjusted
24792479 gross income.
24802480 c. For the purpose of this paragraph, "federal income
24812481 taxes paid" shall mean federal income taxes, surtaxes
24822482 imposed on incomes or excess profits taxes, as though
24832483 the taxpayer was on the accrual basis. In determining
24842484 the amount of deduction for federal income taxes for
24852485 tax year 2001, the amount of the deduction shall not
24862486 be adjusted by the amount of any accelerat ed ten
24872487 percent (10%) tax rate bracket credit or advanced
24882488 refund of the credit received during the tax year
24892489 provided pursuant to the federal Economic Growth and
24902490 Tax Relief Reconciliation Act of 2001, P.L. No. 107-
24912491 16, and the advanced refund of such credit s hall not
24922492 be subject to taxation.
24932493 d. The provisions of this paragraph sh all apply to all
24942494 taxable years ending after December 31, 1978, and
24952495 beginning before January 1, 2006.
24962496 8. Retirement benefits not to exceed Five Thousand Five Hundred
24972497 Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five
24982498 Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand
24992499 Dollars ($10,000.00) for the 2006 tax year and all s ubsequent tax
25002500 years, which are received by an individual from the civil service of
25012501 the United States, the Oklahoma Public Employees Retirement System,
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25282528 the Teachers' Retirement System of Oklahoma, the Oklahoma Law
25292529 Enforcement Retirement System, the Oklahoma Firefighters Pension and
25302530 Retirement System, the Oklahoma Police Pension and Retirement
25312531 System, the employee retirement systems created by counties pursuant
25322532 to Section 951 et seq. of Title 19 of the Oklahoma Statutes, the
25332533 Uniform Retirement System for Just ices and Judges, the Oklahoma
25342534 Wildlife Conservation Department Retirement Fund, the Oklahoma
25352535 Employment Security Commission Retirement Plan, or the employee
25362536 retirement systems created by municipalities pursuant to Section 48-
25372537 101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt
25382538 from taxable income.
25392539 9. In taxable years beginning after D ecember 3l, 1984, Social
25402540 Security benefits received by an individual sh all be exempt from
25412541 taxable income, to the extent such benefits are included in the
25422542 federal adjusted gross income pursuant to the provisions of Section
25432543 86 of the Internal Revenue Code, 2 6 U.S.C., Section 86.
25442544 10. For taxable years beginning after December 3 1, 1994, lump-
25452545 sum distributions from employer plans of deferred compensation,
25462546 which are not qualified plans within the meaning of Section 401(a)
25472547 of the Internal Revenue Code, 26 U.S.C., Section 401(a), and which
25482548 are deposited in and accounted for within a separate bank account or
25492549 brokerage account in a financial institution within this state,
25502550 shall be excluded from taxable income in the same manner as a
25512551 qualifying rollover contribution t o an individual retirement account
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25782578 within the meaning of Section 408 of the Internal Revenue Code, 26
25792579 U.S.C., Section 408. Amounts withdrawn from such bank or bro kerage
25802580 account, including any earnings thereon, shall be included in
25812581 taxable income when with drawn in the same manner as withdrawals from
25822582 individual retirement acco unts within the meaning of Section 408 of
25832583 the Internal Revenue Code.
25842584 11. In taxable years beginning after December 31, 1995,
25852585 contributions made to and interest received from a medical savings
25862586 account established pursuant to Sections 2621 through 2623 of T itle
25872587 63 of the Oklahoma Statutes shall be exempt from taxable income.
25882588 12. For taxable years beginning after December 31, 1996, the
25892589 Oklahoma adjusted gross income of any individual taxp ayer who is a
25902590 swine or poultry producer may be further adjusted for the deduction
25912591 for depreciation allowed for new construction or expansion costs
25922592 which may be computed using the same depreciation method elected for
25932593 federal income tax purposes except that the useful life shall be
25942594 seven (7) years for purposes of this paragraph . If depreciation is
25952595 allowed as a deduction in determining the adjusted gross income of
25962596 an individual, any depreciation calculated and claimed pursuant to
25972597 this section shall in no even t be a duplication of any depreciation
25982598 allowed or permitted on the fede ral income tax return of the
25992599 individual.
26002600 13. a. In taxable years beginning before January 1, 2005,
26012601 retirement benefits not to exceed the amounts
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26282628 specified in this paragraph, which are received by an
26292629 individual sixty-five (65) years of age or older and
26302630 whose Oklahoma adjusted gross income is Twenty-five
26312631 Thousand Dollars ($25,000.00) or less if the filing
26322632 status is single, head of household, or married filing
26332633 separate, or Fifty Thousand Dollars ($50,000.00) or
26342634 less if the filing status is married filing joint or
26352635 qualifying widow, shall be ex empt from taxable income.
26362636 In taxable years beginning after December 31, 2004,
26372637 retirement benefits not to exceed the amounts
26382638 specified in this paragra ph, which are received by an
26392639 individual whose Oklahoma adjusted gross income is
26402640 less than the qualifying a mount specified in this
26412641 paragraph, shall be exempt from tax able income.
26422642 b. For purposes of this paragraph, the qualifying amount
26432643 shall be as follows:
26442644 (1) in taxable years beginning after December 31,
26452645 2004, and prior to January 1, 2007, the
26462646 qualifying amount shall be Thirty-seven Thousand
26472647 Five Hundred Dollars ($37, 500.00) or less if the
26482648 filing status is single, head of household, or
26492649 married filing separa te, or Seventy-five Thousand
26502650 Dollars ($75,000.00) or less if the filing status
26512651 is married filing jointly o r qualifying widow,
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26782678 (2) in the taxable year beginning Janua ry 1, 2007,
26792679 the qualifying amount shall be Fifty Thousand
26802680 Dollars ($50,000.00) or less if t he filing status
26812681 is single, head of household, or married filing
26822682 separate, or One Hundred Thousand Dollars
26832683 ($100,000.00) or less if the filing status is
26842684 married filing jointly or qualifying widow,
26852685 (3) in the taxable year beginning January 1, 2008,
26862686 the qualifying amount shall be Sixty-two Thousand
26872687 Five Hundred Dollars ($62,500.00) or less if the
26882688 filing status is single, head of household, or
26892689 married filing separate, or One Hundred Twenty-
26902690 five Thousand Dollars ($125,000.00) or less if
26912691 the filing status is mar ried filing jointly or
26922692 qualifying widow,
26932693 (4) in the taxable year beginning January 1, 2009,
26942694 the qualifying amount shall be One Hundred
26952695 Thousand Dollars ($100,000.00) or less if the
26962696 filing status is single, head of household, or
26972697 married filing separate, or Two Hundred Thousand
26982698 Dollars ($200,000.00) or less if the filing
26992699 status is married filing jointly or quali fying
27002700 widow, and
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27272727 (5) in the taxable year beginning January 1, 2010,
27282728 and subsequent taxable years, there shall be no
27292729 limitation upon the qualifying amo unt.
27302730 c. For purposes of this paragraph, "retirement benefits"
27312731 means the total distributions or withdrawals from the
27322732 following:
27332733 (1) an employee pension benefit plan w hich satisfies
27342734 the requirements of Section 401 of the Internal
27352735 Revenue Code, 26 U.S.C., Sec tion 401,
27362736 (2) an eligible deferred compensation plan that
27372737 satisfies the requirements of Section 457 of the
27382738 Internal Revenue Code, 26 U.S.C., Section 457,
27392739 (3) an individual retirement account, annuity or
27402740 trust or simplified employee pension that
27412741 satisfies the requirements of Section 408 of the
27422742 Internal Revenue Code, 26 U.S.C., Section 408,
27432743 (4) an employee annuity subject to the provisions of
27442744 Section 403(a) or (b) of the Internal Revenue
27452745 Code, 26 U.S.C., Section 403(a) or (b),
27462746 (5) United States Retirement Bon ds which satisfy the
27472747 requirements of Section 86 of the Internal
27482748 Revenue Code, 26 U.S.C., Section 86, or
27492749 (6) lump-sum distributions from a retirement plan
27502750 which satisfies the requirements of Section
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27772777 402(e) of the Internal Revenue Code, 26 U.S.C.,
27782778 Section 402(e).
27792779 d. The amount of the exemption provided by this paragraph
27802780 shall be limited to Five Thousand Five Hundred Dollars
27812781 ($5,500.00) for the 2004 tax year, Seven Thous and Five
27822782 Hundred Dollars ($7,500.00) for the 2005 tax year and
27832783 Ten Thousand Dollars ($10,00 0.00) for the tax year
27842784 2006 and for all subsequent tax years. Any individual
27852785 who claims the exemption provided for in paragraph 8
27862786 of this subsection shall not be pe rmitted to claim a
27872787 combined total exemption pursuant to this paragraph
27882788 and paragraph 8 of t his subsection in an amount
27892789 exceeding Five Thousand Five Hundred Dollars
27902790 ($5,500.00) for the 2004 tax y ear, Seven Thousand Five
27912791 Hundred Dollars ($7,500.00) for the 2 005 tax year and
27922792 Ten Thousand Dollars ($10,000.00) for the 2006 tax
27932793 year and all subsequent tax years.
27942794 14. In taxable years beginning after December 31, 1999, for an
27952795 individual engaged in production agriculture who has filed a
27962796 Schedule F form with the taxpayer's federal income tax return for
27972797 such taxable year, there shall be excluded from t axable income any
27982798 amount which was included as federal taxable income or federal
27992799 adjusted gross income and which consists of the discharge of an
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28262826 obligation by a creditor of the taxpayer incurred to finance the
28272827 production of agricultural products.
28282828 15. In taxable years beginning December 31, 2000, an amount
28292829 equal to one hundred percent (100%) of the am ount of any scholarship
28302830 or stipend received from participation in the Oklahoma Police Corps
28312831 Program, as established in Section 2-140.3 of Title 47 of the
28322832 Oklahoma Statutes shall be exempt from taxable income.
28332833 16. a. In taxable years beginning after December 31, 2001,
28342834 and before January 1, 2005, there shall be allowed a
28352835 deduction in the amount of contributions to accounts
28362836 established pursuant to the Oklaho ma College Savings
28372837 Plan Act. The deduction shall equal the amount of
28382838 contributions to accounts, but in no event shall the
28392839 deduction for each contributor exceed Two Thousand
28402840 Five Hundred Dollars ($2,500.00) each taxable year for
28412841 each account.
28422842 b. In taxable years beginning after December 31, 2004,
28432843 each taxpayer shall be allowed a deduction for
28442844 contributions to accounts established pursuant to the
28452845 Oklahoma College Savings Plan Act. The maximum annual
28462846 deduction shall equal the amount of contributions to
28472847 all such accounts plus any contributions to such
28482848 accounts by the taxpayer for prior taxable years aft er
28492849 December 31, 2004, which were not deducted, but in no
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28762876 event shall the deduction for each tax year exceed Ten
28772877 Thousand Dollars ($10,000.00) for each individua l
28782878 taxpayer or Twenty Thousand Dollars ($20,000.00) for
28792879 taxpayers filing a joint return . Any amount of a
28802880 contribution that is not deducted by the taxpayer in
28812881 the year for which the contribution is made may be
28822882 carried forward as a deduction from income for the
28832883 succeeding five (5) years. For taxable years
28842884 beginning after December 31, 2005, deductions may be
28852885 taken for contributions and rollovers made during a
28862886 taxable year and up to April 15 of the succeeding
28872887 year, or the due date of a taxpayer's state income tax
28882888 return, excluding extensions, whichever is later.
28892889 Provided, a deduction for the same contri bution may
28902890 not be taken for two (2) different taxable years.
28912891 c. In taxable years beginning after December 31, 2006,
28922892 deductions for contributions made pursuant t o
28932893 subparagraph b of this paragraph shall be limited as
28942894 follows:
28952895 (1) for a taxpayer who qualifi ed for the five-year
28962896 carryforward election and who takes a rollover or
28972897 nonqualified withdrawal during that period, the
28982898 tax deduction otherwise available pursuant to
28992899 subparagraph b of this paragraph shall be reduced
29002900
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29262926 by the amount which is equal to the rollo ver or
29272927 nonqualified withdrawal, and
29282928 (2) for a taxpayer who elects to take a rollover or
29292929 nonqualified withdrawal within the same tax year
29302930 in which a contribution w as made to the
29312931 taxpayer's account, the tax deduction otherwise
29322932 available pursuant to subparag raph b of this
29332933 paragraph shall be reduced by the amount of the
29342934 contribution which is equal to the rollover or
29352935 nonqualified withdrawal.
29362936 d. If a taxpayer elects to t ake a rollover on a
29372937 contribution for which a deduction has been taken
29382938 pursuant to subparagra ph b of this paragraph within
29392939 one (1) year of the date of contribution, the amount
29402940 of such rollover shall be included in the adjusted
29412941 gross income of the taxpayer i n the taxable year of
29422942 the rollover.
29432943 e. If a taxpayer makes a nonqualified withdrawal of
29442944 contributions for which a deduction was taken pursuant
29452945 to subparagraph b of this paragra ph, such nonqualified
29462946 withdrawal and any earnings thereon shall be included
29472947 in the adjusted gross income of the taxpayer in the
29482948 taxable year of the nonqualified withdrawal .
29492949 f. As used in this paragraph:
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29762976 (1) "non-qualified withdrawal" means a withdrawal
29772977 from an Oklahoma College Savings Plan account
29782978 other than one of the following:
29792979 (a) a qualified withdrawal,
29802980 (b) a withdrawal made as a result of the death
29812981 or disability of the designated beneficiary
29822982 of an account,
29832983 (c) a withdrawal that is made on the account of
29842984 a scholarship or the allowance or payment
29852985 described in Section 135(d)(1)(B) or (C) or
29862986 by the Internal Revenue Code, received by
29872987 the designated beneficiary to the ex tent the
29882988 amount of the refund does not exceed the
29892989 amount of the scholarship, allowance, or
29902990 payment, or
29912991 (d) a rollover or change of designated
29922992 beneficiary as permitted by subsection F of
29932993 Section 3970.7 of Title 70 of Oklahoma
29942994 Statutes, and
29952995 (2) "rollover" means the transfer of funds from the
29962996 Oklahoma College Savings Plan to any other plan
29972997 under Section 529 of the Internal Revenue Code.
29982998 17. For taxable years beginning aft er December 31, 2005,
29992999 retirement benefits received by an individual from any compo nent of
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30263026 the Armed Forces of the United States in an amount not to exceed the
30273027 greater of seventy-five percent (75%) of such benefits or Ten
30283028 Thousand Dollars ($10,000.00) shall be exempt from taxable income
30293029 but in no case less than the amount of the exemptio n provided by
30303030 paragraph 13 of this subsection.
30313031 18. For taxable years beginning after December 31, 2006,
30323032 retirement benefits received by federal civil service retirees,
30333033 including survivor annuities, paid in lieu of Social Security
30343034 benefits shall be exempt from taxable income t o the extent such
30353035 benefits are included in the federal adjusted gross income pursuant
30363036 to the provisions of Section 86 of the Internal Revenue Code, 26
30373037 U.S.C., Section 86, according to the following schedule:
30383038 a. in the taxable year beginning January 1, 2007 , twenty
30393039 percent (20%) of such benefits shall be exempt,
30403040 b. in the taxable year beginning January 1, 2008, forty
30413041 percent (40%) of such benefits shall be exempt,
30423042 c. in the taxable year beginning January 1, 2009, sixty
30433043 percent (60%) of such benefits shall be exempt,
30443044 d. in the taxable year beginning January 1, 2010, eighty
30453045 percent (80%) of such benefits shall be exempt, and
30463046 e. in the taxable year beginning January 1, 2011, and
30473047 subsequent taxable years, one hundred percent (100 %)
30483048 of such benefits shall be exemp t.
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30753075 19. a. For taxable years beginning after December 31, 2007, a
30763076 resident individual may deduct up to Ten Thousand
30773077 Dollars ($10,000.00) from Oklahoma adjusted gross
30783078 income if the individual, or the dependent of the
30793079 individual, while living, donates one or more human
30803080 organs of the individual to another human being for
30813081 human organ transplantation. As used in this
30823082 paragraph, "human organ" means all or part of a liver,
30833083 pancreas, kidney, intestine, lung, or bone marrow. A
30843084 deduction that is claimed under th is paragraph may be
30853085 claimed in the taxable year in which the human organ
30863086 transplantation occurs.
30873087 b. An individual may claim this deduction only once, and
30883088 the deduction may be claimed only for unreimbursed
30893089 expenses that are incurred by the individual and
30903090 related to the organ do nation of the individual.
30913091 c. The Oklahoma Tax Commission shall promulgate rules to
30923092 implement the provisions of this paragraph which shall
30933093 contain a specific list of expenses which may be
30943094 presumed to qualify for the deduction. The Tax
30953095 Commission shall pres cribe necessary requirements for
30963096 verification.
30973097 20. For taxable years beginning after December 31, 2009, there
30983098 shall be exempt from taxable income any amount received by the
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31253125 beneficiary of the death benefit for an emergency medical technician
31263126 or a registered emergency medical responder provided by Section 1-
31273127 2505.1 of Title 63 of the Oklahoma Statutes.
31283128 21. For taxable years beginning after December 31, 2008,
31293129 taxable income shall be increased by any unemployment compensation
31303130 exempted under Section 85(c) of the Internal Revenue Code, 26
31313131 U.S.C., Section 85(c)(2009).
31323132 22. For taxable years beginning after December 31, 2008, there
31333133 shall be exempt from taxable income a ny payment in an amount less
31343134 than Six Hundred Dollars ($600.00) rec eived by a person as an award
31353135 for participation in a competitive livestock show event. For
31363136 purposes of this paragraph, the payment shall be treated as a
31373137 scholarship amount paid by the enti ty sponsoring the event and the
31383138 sponsoring entity shall cause the p ayment to be categor ized as a
31393139 scholarship in its books and records.
31403140 23. For taxable years beginning on or after January 1, 2016,
31413141 taxable income shall be increased by any amount of stat e and local
31423142 sales or income taxes deducted under 26 U.S.C., Section 164 of the
31433143 Internal Revenue Code. If the amount of state and local taxes
31443144 deducted on the federal return is limited, taxable income on the
31453145 state return shall be increased only by the amoun t actually deducted
31463146 after any such limitations are applied.
31473147 24. For taxable years beginning after De cember 31, 2020, each
31483148 taxpayer shall be allowed a deduction for contributions to a ccounts
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31753175 established pursuant to the Achieving a Better Life Experienc e
31763176 (ABLE) Program as established in Section 4001.1 et seq. of Title 56
31773177 of the Oklahoma Statutes. For any tax year, the deduction provided
31783178 for in this paragraph shall not exceed Ten Thousa nd Dollars
31793179 ($10,000.00) for an individual taxpayer or Twenty Thousand Dollars
31803180 ($20,000.00) for taxpayers filing a joint return . Any amount of
31813181 contribution not deducted by th e taxpayer in the tax year for which
31823182 the contribution is ma de may be carried forwa rd as a deduction from
31833183 income for up to five (5) tax years. Deductions may be taken for
31843184 contributions made during the tax year and throug h April 15 of the
31853185 succeeding tax year, or through the due date of a taxpayer's state
31863186 income tax return excluding exten sions, whichever is later.
31873187 Provided, a deduction for the same contri bution may not be taken in
31883188 more than one (1) tax year.
31893189 F. 1. For taxable years beginning after December 31, 2004, a
31903190 deduction from the Oklahoma adjusted gross inc ome of any individual
31913191 taxpayer shall be allowed for qualifying gains receiving capital
31923192 treatment that are included in the federal adjusted gross income of
31933193 such individual taxpayer during the taxabl e year.
31943194 2. As used in this subsection:
31953195 a. "qualifying gains receiving capital tre atment" means
31963196 the amount of net capital gains, as defined in Section
31973197 1222(11) of the Internal Revenue Code, included in an
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32243224 individual taxpayer's federal income tax return tha t
32253225 result from:
32263226 (1) the sale of real property or tangible personal
32273227 property located within Oklahoma that has been
32283228 directly or indirectly owned by the in dividual
32293229 taxpayer for a holding period of at least five
32303230 (5) years prior to the date of the transaction
32313231 from which such net capital gains arise,
32323232 (2) the sale of stock or the sale of a dire ct or
32333233 indirect ownership interest in an Oklahoma
32343234 company, limited lia bility company, or
32353235 partnership where such stock or ownership
32363236 interest has been directly or indirectly own ed by
32373237 the individual taxpayer for a holding period of
32383238 at least two (2) years prior to the date of the
32393239 transaction from which the net capital gains
32403240 arise, or
32413241 (3) the sale of real property, tangible personal
32423242 property or intangible personal property located
32433243 within Oklahoma as part of the sale of all or
32443244 substantially all of the assets of an Oklahoma
32453245 company, limited liability company, or
32463246 partnership or an Ok lahoma proprietorship
32473247 business enterprise where such property has been
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32743274 directly or indirectly owned by su ch entity or
32753275 business enterprise or owned by the owners of
32763276 such entity or business enterprise for a period
32773277 of at least two (2) years prior to the date of
32783278 the transaction from which the net capital gains
32793279 arise,
32803280 b. "holding period" means an uninterrupted per iod of
32813281 time. The holding period shall include any additional
32823282 period when the prop erty was held by another
32833283 individual or entity, if such additional per iod is
32843284 included in the taxpayer's holding period for the
32853285 asset pursuant to the Internal Revenue Code,
32863286 c. "Oklahoma company," "limited liability company," or
32873287 "partnership" means an entity whose primary
32883288 headquarters have been located in Oklahoma for at
32893289 least three (3) uninterrupted years prior to the date
32903290 of the transaction fr om which the net capital gains
32913291 arise,
32923292 d. "direct" means the individual taxpayer directly owns
32933293 the asset,
32943294 e. "indirect" means the individual taxpayer owns an
32953295 interest in a pass-through entity (or chain of pass-
32963296 through entities) that sells the asset that giv es rise
32973297 to the qualifying gains rec eiving capital treatment.
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33243324 (1) With respect to sales of real property or
33253325 tangible personal property located within
33263326 Oklahoma, the deduction described in this
33273327 subsection shall not apply unless the pass-
33283328 through entity that ma kes the sale has held the
33293329 property for not less than five (5) uninterrupted
33303330 years prior to the date of the transactio n that
33313331 created the capital gain, and each pass-through
33323332 entity included in the chain of ownership has
33333333 been a member, partner, or shareholder of the
33343334 pass-through entity in the tier immediately below
33353335 it for an uninterrupted period of not less than
33363336 five (5) years.
33373337 (2) With respect to sales of stock or ownership
33383338 interest in or sales of all or substantially all
33393339 of the assets of an Oklahoma company, limited
33403340 liability company, partner ship or Oklahoma
33413341 proprietorship business enterprise, the deduction
33423342 described in this subsection shall not apply
33433343 unless the pass-through entity that mak es the
33443344 sale has held the stock or ownership interest for
33453345 not less than two (2) uninterrupted years prior
33463346 to the date of the transaction that created the
33473347 capital gain, and each pass-through entity
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33743374 included in the chain of ownership has been a
33753375 member, partner or shareholder of the pass-
33763376 through entity in the tier immediately be low it
33773377 for an uninterrupted period of not less than two
33783378 (2) years. For purposes of this division,
33793379 uninterrupted ownership prior to July 1, 2007,
33803380 shall be included in the determination o f the
33813381 required holding period prescribed by this
33823382 division, and
33833383 f. "Oklahoma proprietorship business enter prise" means a
33843384 business enterprise whose income and expenses have
33853385 been reported on Schedule C or F of an individual
33863386 taxpayer's federal income tax retur n, or any similar
33873387 successor schedule published by the Internal Revenue
33883388 Service and whose primary headquar ters have been
33893389 located in Oklahoma for at least three (3)
33903390 uninterrupted years prio r to the date of the
33913391 transaction from which the net capital gains ari se.
33923392 G. 1. For purposes of computing its Oklahoma taxable income
33933393 under this section, the dividends -paid deduction otherwise allowed
33943394 by federal law in computing net income of a real estat e investment
33953395 trust that is subject to federal income tax shall be add ed back in
33963396 computing the tax imposed by this state under this title if the real
33973397 estate investment trust i s a captive real estate investment trust.
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34243424 2. For purposes of computing its Oklaho ma taxable income under
34253425 this section, a taxpayer shall add back other wise deductible rents
34263426 and interest expenses paid to a captive real est ate investment trust
34273427 that is not subject to the provisions of paragraph 1 of this
34283428 subsection. As used in this subsection:
34293429 a. the term "real estate investment trust" or "REIT"
34303430 means the meaning ascribed to such term in Section 856
34313431 of the Internal Revenue Code,
34323432 b. the term "captive real estate investment trust" means
34333433 a real estate investment trust, the shares or
34343434 beneficial interests of which are not regularly traded
34353435 on an established secur ities market and more than
34363436 fifty percent (50%) of the voting power o r value of
34373437 the beneficial interests o r shares of which are owned
34383438 or controlled, directly or indirectly, or
34393439 constructively, by a single entity that is:
34403440 (1) treated as an association taxable as a
34413441 corporation under the Internal Revenue Code, and
34423442 (2) not exempt from federal income tax pursuant to
34433443 the provisions of Section 501(a) of the Internal
34443444 Revenue Code.
34453445 The term shall not include a real estate investment
34463446 trust that is intended to be regula rly traded on an
34473447 established securities market, and that satisfie s the
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34743474 requirements of Section 856(a)(5) and (6) of the U.S.
34753475 Internal Revenue Code by reason of Section 856(h)(2)
34763476 of the Internal Revenue Code,
34773477 c. the term "association taxable as a corporati on" shall
34783478 not include the following entities:
34793479 (1) any real estate investment trust as defined in
34803480 paragraph a of this subsection other than a
34813481 "captive real estate inv estment trust", or
34823482 (2) any qualified real estate investment trust
34833483 subsidiary under Section 856(i) of the Internal
34843484 Revenue Code, other than a qualified REI T
34853485 subsidiary of a "captive real estate inve stment
34863486 trust", or
34873487 (3) any Listed Australian Property Trust (meaning an
34883488 Australian unit trust registered as a "Managed
34893489 Investment Scheme" under the Australian
34903490 Corporations Act in which the principal class of
34913491 units is listed on a recognized stock exchange in
34923492 Australia and is regularly traded on an
34933493 established securities market), or an ent ity
34943494 organized as a trust, provided that a Listed
34953495 Australian Property Trust owns or controls,
34963496 directly or indirectly, seventy -five percent
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35233523 (75%) or more of the voting power or value of the
35243524 beneficial interests or shares of such trust, or
35253525 (4) any Qualified Foreign Entity, meaning a
35263526 corporation, trust, association or partnership
35273527 organized outside the laws of the United States
35283528 and which satisfies the following criteria:
35293529 (a) at least seventy-five percent (75%) of the
35303530 entity's total asset value at the close of
35313531 its taxable year is represented by real
35323532 estate assets, as defined in Section
35333533 856(c)(5)(B) of the Internal Revenue Code,
35343534 thereby including shares or certificates of
35353535 beneficial interest in any real estate
35363536 investment trust, cash and cash equivalents,
35373537 and U.S. Government securities,
35383538 (b) the entity receives a dividend-paid
35393539 deduction comparable to Section 561 of the
35403540 Internal Revenue Code, or is exempt from
35413541 entity level tax,
35423542 (c) the entity is required to distribute at
35433543 least eighty-five percent (85%) of its
35443544 taxable income, as computed in the
35453545 jurisdiction in which it is organized, to
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35723572 the holders of its shares or certificates of
35733573 beneficial interest on an annual basis,
35743574 (d) not more than ten percent (10%) of the
35753575 voting power or value in such entity is held
35763576 directly or indirectly or constructively by
35773577 a single entity or individual, or the shares
35783578 or beneficial interests of such entity are
35793579 regularly traded on an established
35803580 securities market, and
35813581 (e) the entity is organized in a country which
35823582 has a tax treaty with the United S tates.
35833583 3. For purposes of this subsection, the constructive ownership
35843584 rules of Section 318(a) of the Internal Revenue Code , as modified by
35853585 Section 856(d)(5) of the Internal Revenue Code, shall apply in
35863586 determining the ownership of s tock, assets, or net pr ofits of any
35873587 person.
35883588 4. A real estate investment trust that does not become
35893589 regularly traded on an established securities market within one (1)
35903590 year of the date on which it first becomes a real estate investment
35913591 trust shall be deeme d not to have been regu larly traded on an
35923592 established securities market, retroactive to the date it first
35933593 became a real estate investment trust, and shall file an amended
35943594 return reflecting such ret roactive designation for any tax year or
35953595 part year occurring during its initial ye ar of status as a real
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36223622 estate investment trust. For purposes of this subsection, a real
36233623 estate investment trust becomes a real estate investment trust on
36243624 the first day it has both met the requirements of Section 856 of the
36253625 Internal Revenue Code and has el ected to be treated as a real estate
36263626 investment trust pursuant to Section 856(c)(1) of the Internal
36273627 Revenue Code.
36283628 SECTION 3. This act shall become effective November 1, 2023.
36293629
36303630 59-1-5754 MAH 01/18/23