Oklahoma Senate Bill SB384 Introduced / Bill

                     
 
 
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STATE OF OKLAHOMA 
 
1st Session of the 59th Legislature (2023) 
 
SENATE BILL 384 	By: Garvin 
 
 
 
 
 
AS INTRODUCED 
 
An Act relating to income tax; amending 68 O. S. 2021, 
Section 2358, as last amended by Section 1, Chapter 
377, O.S.L. 2022 (68 O.S. Supp. 2022, Section 2358), 
which relates to adjustments to arrive at Oklahoma 
taxable income and Oklahoma adjusted gross income; 
allowing deduction for a percentage of certain wages 
paid; requiring certain amount of wages paid to 
qualify for deduction; limiting deduction to wages 
paid to employee who takes leave for certain reasons; 
updating statutory language; and providing an 
effective date. 
 
 
 
 
 
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA: 
SECTION 1.     AMENDATORY     68 O.S. 2021, Section 2358, as 
last amended by Section 1, Chapter 377, O.S.L. 2022 (68 O.S. Supp. 
2022, Section 2358), is amended to read as follows: 
Section 2358. For all tax years beginning after December 31, 
1981, taxable income and adjusted gross incom e shall be adjusted to 
arrive at Oklahoma taxable income and Okl ahoma adjusted gross income 
as required by this section.   
 
 
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A.  The taxable income of any taxp ayer shall be adjusted to 
arrive at Oklahoma taxable income for corporations and Oklahoma 
adjusted gross income for individuals, as fol lows: 
1. There shall be added interest income on obligations of any 
state or political subdivision thereto which is not otherwise 
exempted pursuant to other laws of this state, to the extent that 
such interest is not incl uded in taxable income and adjuste d gross 
income. 
2.  There shall be deducted amounts included in such income that 
the state is prohibited from taxing beca use of the provisions of the 
Federal Constitution, the State Constitution, federal laws , or laws 
of Oklahoma. 
3.  The amount of any fede ral net operating loss deducti on shall 
be adjusted as follows: 
a. For carryovers and carrybacks to taxable years 
beginning before January 1, 1981, the amount of any 
net operating loss deduction allowed to a taxpayer for 
federal income tax purposes shall be reduced to an 
amount which is the same portion thereof as the loss 
from sources within this state, as determined pursuan t 
to this section and Section 2362 of this title, for 
the taxable year in which such loss is sustaine d is of 
the total loss for such ye ar; and   
 
 
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b. For carryovers and carr ybacks to taxable years 
beginning after December 31, 1980, the amount of any 
net operating loss deduction allowed for the taxable 
year shall be an amount equal to the aggregate of the 
Oklahoma net operating loss carryovers and carrybacks 
to such year.  Oklahoma net operating losses shall b e 
separately determined by reference to Section 172 of 
the Internal Revenue Code, 26 U.S.C., Section 172, as 
modified by the Oklahoma Income Tax Act, Section 2351 
et seq. of this title, and sh all be allowed without 
regard to the existence of a federal net operating 
loss.  For tax years beginning after December 3 1, 
2000, and ending before January 1, 2008, the years to 
which such losses may be carried shall be d etermined 
solely by reference to Se ction 172 of the Internal 
Revenue Code, 26 U.S.C., Section 172, with the 
exception that the terms “net operating loss” and 
“taxable income” shall be replaced with “Oklahoma net 
operating loss” and “Oklahoma taxable income ”.  For 
tax years beginning after D ecember 31, 2007, and 
ending before January 1, 2009, years to wh ich such 
losses may be carried back shall be limited to t wo (2) 
years.  For tax years beginning after December 31, 
2008, the years to which such losses may b e carried   
 
 
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back shall be determined solely by reference to 
Section 172 of the Internal Revenue Code, 26 U.S.C., 
Section 172, with the exception that the term s “net 
operating loss” and “taxable income” shall be replaced 
with “Oklahoma net operating loss ” and “Oklahoma 
taxable income”. 
4.  Items of the following nature sha ll be allocated as 
indicated.  Allowable deductions attributable to items separately 
allocable in subparagraphs a, b, and c of this paragraph, whether or 
not such items of income were actuall y received, shall be allocated 
on the same basis as those items: 
a. Income from real and tangible p ersonal property, such 
as rents, oil and mining production or royalties, and 
gains or losses from sales of such property, shall be 
allocated in accordance wi th the situs of such 
property; 
b. Income from intangible personal property, such as 
interest, dividends, patent or copyright royalties, 
and gains or losses f rom sales of such property, shall 
be allocated in accordance with the domiciliary situs 
of the taxpayer, except that: 
(1) where such property has acquired a nonunit ary 
business or commercial situs a part from the 
domicile of the taxpayer such income shall be   
 
 
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allocated in accordance with such business or 
commercial situs; interest income from 
investments held to generate workin g capital for 
a unitary business enterpris e shall be included 
in apportionable income; a resident trust or 
resident estate shall be treated a s having a 
separate commercial or business situs insofar as 
undistributed income is concerne d, but shall not 
be treated as having a separate commercial or 
business situs insofar as distribute d income is 
concerned, 
(2) for taxable years beginning after Dece mber 31, 
2003, capital or ordinary gains or losses from 
the sale of an ownership interest in a publicly 
traded partnership, as defined by Section 7704(b) 
of the Internal Revenue Code, shall b e allocated 
to this state in the ratio of the original cost 
of such partnership’s tangible property in this 
state to the original cost of such partnership ’s 
tangible property every where, as determined at 
the time of the sale; if more than fifty percent 
(50%) of the value of the partnership ’s assets 
consists of intangibl e assets, capital or 
ordinary gains or losses from the sale of an   
 
 
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ownership interest in the partnership shall be 
allocated to this state in accordance with t he 
sales factor of the partnership for its first 
full tax period immediately preceding its tax 
period during which the ownership interest in the 
partnership was sold; the provisions of this 
division shall only appl y if the capital or 
ordinary gains or loss es from the sale of an 
ownership interest in a partnership do not 
constitute qualifying gain receiv ing capital 
treatment as defined in subparagraph a of 
paragraph 2 of subsection F of this se ction, 
(3) income from such property which is required to be 
allocated pursuant to the provisions o f paragraph 
5 of this subsection shall be allocated as herein 
provided; 
c. Net income or loss from a business activity which is 
not a part of business carrie d on within or without 
the state of a unitary character shall be separately 
allocated to the state in which such activity is 
conducted; 
d. In the case of a manufact uring or processing 
enterprise the business of which in Oklahoma consists 
solely of marketing its products by:   
 
 
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(1) sales having a situs without this state, s hipped 
directly to a point from wi thout the state to a 
purchaser within the state, commonly known a s 
interstate sales, 
(2) sales of the product stored in public warehouses 
within the state pursuant to “in transit” 
tariffs, as prescribed and allowed by the 
Interstate Commerce Commission, to a purchaser 
within the state, or 
(3) sales of the product stored in public warehouses 
within the state where the shipment to such 
warehouses is not covered by “in transit” 
tariffs, as prescribed and allowed by the 
Interstate Commerce Commission, to a purc haser 
within or without the state, 
the Oklahoma net income shall, at the option of the 
taxpayer, be that portion of the total net income of 
the taxpayer for federal income tax purpose s derived 
from the manufacture and/or proc essing and sales 
everywhere as determined by the ratio of the sales 
defined in this section made to the purchaser within 
the state to the total sales everywhere.  The term 
“public warehouse” as used in this subpara graph means   
 
 
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a licensed public warehouse, t he principal business of 
which is warehousing merchandise for the public; 
e. In the case of insuran ce companies, Oklahoma taxable 
income shall be taxable income of the taxpayer for 
federal tax purposes, as adjusted for the adjustments 
provided pursuant to the provisions of paragraphs 1 
and 2 of this subsection, apportioned as follows: 
(1) except as otherwise provided by division (2) of 
this subparagraph, taxable income of an insurance 
company for a taxable year shal l be apportioned 
to this state by multiply ing such income by a 
fraction, the numerator of which is the direct 
premiums written for insurance on property or 
risks in this state, and the denominator of which 
is the direct premiums w ritten for insurance on 
property or risks everywhere.  For purposes of 
this subsection, the term “direct premiums 
written” means the total amount of direct 
premiums written, assessments, and annuity 
considerations as reported for the taxable year 
on the annual statement filed by the company with 
the Insurance Commissioner i n the form approved 
by the National Association of Insurance   
 
 
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Commissioners, or such other form as m ay be 
prescribed in lieu thereof, 
(2) if the principal source of premiums written by an 
insurance company consists of premiums for 
reinsurance accepted by it , the taxable income of 
such company shall be apportioned to this state 
by multiplying such income by a fraction, the 
numerator of which is the sum of (a) direct 
premiums written for insu rance on property or 
risks in this state, plus (b) premiums written 
for reinsurance accepted in res pect of property 
or risks in this state, and the denominator of 
which is the sum of (c) direct premiums written 
for insurance on property or risks everywhere , 
plus (d) premiums written for reinsurance 
accepted in respect of pr operty or risks 
everywhere.  For purposes of this paragraph, 
premiums written for reinsurance accep ted in 
respect of property or risks in this state, 
whether or not otherwise determinable , may at the 
election of the company be determined on the 
basis of the proportion which premiums wr itten 
for insurance accepted from companies 
commercially domiciled in Oklahoma bears to   
 
 
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premiums written for reinsurance accepted from 
all sources, or altern atively in the proportion 
which the sum of the direct premiums writte n for 
insurance on property or risks in this state by 
each ceding company from which reinsurance is 
accepted bears to the sum of the total direct 
premiums written by each such ceding comp any for 
the taxable year. 
5. The net income or loss remaining after the separate 
allocation in paragraph 4 of this subsection, being that which is 
derived from a unita ry business enterprise, shall be apportioned to 
this state on the basis of the arithmeti cal average of three facto rs 
consisting of property, payroll, and sales or gross revenue 
enumerated as subparagraphs a, b, and c of this paragraph.  Net 
income or loss as used in this paragraph includes that derived from 
patent or copyright royalties, purc hase discounts, and interest on 
accounts receivable relating to or ar ising from a business activity , 
the income from which is apportioned pursuant to this subsection , 
including the sale or other disposition of such property and any 
other property used in t he unitary enterprise.  Dedu ctions used in 
computing such net income or loss shall not include taxe s based on 
or measured by income.  Provided, for corporations whose pro perty 
for purposes of the tax imposed by Section 2355 of this title has an 
initial investment cost equaling or exc eeding Two Hundred Million   
 
 
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Dollars ($200,000,000.00) and such investmen t is made on or after 
July 1, 1997, or for corporations which expand th eir property or 
facilities in this state and such expansion has an investment cost 
equaling or exceeding Two Hundred Million Dollars ($200,000,000.00) 
over a period not to exceed three (3) years, and such expansion is 
commenced on or after January 1, 2000, the three factors shall be 
apportioned with property and payroll, each comprising twe nty-five 
percent (25%) of the apportionment factor and sales comprisi ng fifty 
percent (50%) of the apportionment factor.  The apportionment 
factors shall be computed as f ollows: 
a. The property factor is a fraction, the numerator of 
which is the average va lue of the taxpayer’s real and 
tangible personal property owned or re nted and used in 
this state during the tax period and the denominator 
of which is the average value o f all the taxpayer’s 
real and tangible personal property everywhere owned 
or rented and used during the tax period. 
(1) Property, the income from which is separately 
allocated in paragraph 4 of this subsection, 
shall not be included in determining this 
fraction.  The numerator of the fraction shall 
include a portion of the investment in 
transportation and other equipment having no 
fixed situs, such as rolli ng stock, buses, trucks   
 
 
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and trailers, including machinery and equipment 
carried thereon, airplanes, sa lespersons’ 
automobiles, and other similar equipment, in the 
proportion that miles tra veled in Oklahoma by 
such equipment bears to total miles traveled, 
(2) Property owned by the taxpay er is valued at its 
original cost.  Property rented by the taxpayer 
is valued at eight times the net annual rental 
rate.  Net annual rental rate is the annua l 
rental rate paid by the taxpayer, less any annual 
rental rate received by the taxpayer from 
subrentals, 
(3) The average value of property shall be determined 
by averaging the values at the beginning and 
ending of the tax period, but the Oklahoma Tax 
Commission may require the averaging of monthly 
values during the tax period if reasonably 
required to reflect properly the average value of 
the taxpayer’s property; 
b. The payroll factor is a fraction, the numerator of 
which is the total compensation for serv ices rendered 
in the state during the tax period, and the 
denominator of which is the total compens ation for 
services rendered everywhere during the tax period.    
 
 
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“Compensation”, as used in this subsection means those 
paid-for services to the extent related to the unitary 
business but does not include officers’ salaries, 
wages, and other compensation. 
(1) In the case of a transportation enterprise, the 
numerator of the fractio n shall include a portion 
of such expenditure in connection with employees 
operating equipment over a fixed route, such as 
railroad employees, airline pilots, or bus 
drivers, in this state only a part of the time, 
in the proportion that mileage traveled in 
Oklahoma bears to total mileage traveled by such 
employees, 
(2) In any case the numerator of the fraction shall 
include a portion of such expenditures in 
connection with itinerant e mployees, such as 
traveling salespersons, in this state only a part 
of the time, in the proportion that time spent in 
Oklahoma bears to total time spent in f urtherance 
of the enterprise by such employees; 
c. The sales factor is a fraction, the numerator of which 
is the total sales or gross revenue of the taxpayer in 
this state during the tax period, and the denominator 
of which is the total sales or gross reve nue of the   
 
 
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taxpayer everywhere during the tax period.  “Sales”, 
as used in this subsection does not include sales or 
gross revenue which are separately allocated in 
paragraph 4 of this subsection. 
(1) Sales of tangible personal property have a situs 
in this state if the property is delivered or 
shipped to a purchaser other than the United 
States government, within this state regardless 
of the FOB point or other conditions of the sale; 
or the property is shipped from an office, store, 
warehouse, factory, or other place of storage in 
this state and (a) t he purchaser is the United 
States government or (b) t he taxpayer is not 
doing business in the state of the destination of 
the shipment. 
(2) In the case of a railroad or interurban railway 
enterprise, the numera tor of the fraction shall 
not be less than the allocation of revenues to 
this state as shown in its annual report to the 
Corporation Commission. 
(3) In the case of an airline , truck, or bus 
enterprise or freight car, tank car, refrigerator 
car, or other railroad equipment enterprise, the 
numerator of the fraction shall include a portion   
 
 
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of revenue from interstate transportation in the 
proportion that interstate mileage traveled in 
Oklahoma bears to total interstate mileage 
traveled. 
(4) In the case of an oi l, gasoline or gas pipeline 
enterprise, the nume rator of the fraction shall 
be either the total of traffic units of the 
enterprise within Oklahoma or the revenue 
allocated to Oklahoma based upon miles moved, at 
the option of the taxpayer, and the denominat or 
of which shall be the total of traffic units of 
the enterprise or the revenue of the enterprise 
everywhere as appropriate to the numerator.  A 
“traffic unit” is hereby defined as the 
transportation for a distance of one (1) mile of 
one (1) barrel of oil , one (1) gallon of 
gasoline, or one thousand (1,000) cubic feet of 
natural or casinghead gas, as the case may be. 
(5) In the case of a telephone or telegraph or other 
communication enterprise, the numerator of the 
fraction shall include that portion of th e 
interstate revenue as is allocated pursuant to 
the accounting procedures prescribed by the 
Federal Communications Commission; provided that   
 
 
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in respect to each corporation or b usiness entity 
required by the Federal Communications Commission 
to keep its books and records in accordance with 
a uniform system of accounts prescribed by such 
Commission, the intrastate net income shall be 
determined separately in the manner provided by 
such uniform system of accounts and only the 
interstate income shall be subjec t to allocation 
pursuant to the provisions of thi s subsection.  
Provided further, that the gross revenue factors 
shall be those as are determined pursuant to the 
accounting procedures prescribed by the Federal 
Communications Commission. 
In any case where the apportionment of the three factors 
prescribed in this paragraph attributes to Oklahoma a portion of net 
income of the enterprise out of all appropriate proportion to the 
property owned and/or business transacted within this state, because 
of the fact that one or more of the factors so prescribed are not 
employed to any appreciable extent in furtherance of the enterprise; 
or because one or more factors not so prescribed are emp loyed to a 
considerable extent in furtherance of the enterprise; or because of 
other reasons, the Tax Commission is empowered to permit, after a 
showing by a taxpayer that an excessive portion of net income has 
been attributed to Oklahoma, or require, when in its judgment an   
 
 
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insufficient portion of net income has been attributed to O klahoma, 
the elimination, substitution, or use of a dditional factors, or 
reduction or increase in the weight of such prescribed factors.  
Provided, however, that any such varianc e from such prescribed 
factors which has the effect of increasing the portion of net income 
attributable to Oklahoma must not be inherently arbitrary, and 
application of the recomputed final apportionment to the net income 
of the enterprise must attribute to Oklahoma only a reasonable 
portion thereof. 
6.  For calendar years 1997 and 1998, the owner of a new or 
expanded agricultural commodity processing facility in this state 
may exclude from Oklahoma taxable income, or in the case of an 
individual, the Okla homa adjusted gross income, fifteen percent 
(15%) of the investment by the own er in the new or expanded 
agricultural commodity pr ocessing facility.  For calendar year 1999, 
and all subsequent years, the percentage, not to exceed fifteen 
percent (15%), available to the owner of a new or expanded 
agricultural commodity processing faci lity in this state claiming 
the exemption shall be adjusted annually so that the total estimated 
reduction in tax liability does not exceed One Million Dollars 
($1,000,000.00) annually.  The Tax Commission shall promulgate rules 
for determining the percent age of the investment which each eligible 
taxpayer may exclude.  The exclusion provided by this paragraph 
shall be taken in the taxable year when the investment is made.  In   
 
 
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the event the total reduction in tax liability authorized by this 
paragraph exceeds One Million Dollars ($1,000,000.00) in any 
calendar year, the Tax Commission shall permit any excess over One 
Million Dollars ($1,000,000.00) and shall factor such excess into 
the percentage for subsequent years.  Any amount of the exemption 
permitted to be excluded pursuant to the provisions of this 
paragraph but not used in any year may be carried forward as an 
exemption from income pursuant to the provisions of this paragraph 
for a period not exceeding six (6) years following the year in which 
the investment was originally made. 
For purposes of this paragraph: 
a. “Agricultural commodity processing facility” means 
building buildings, structures, fixtures , and 
improvements used or operated primarily for the 
processing or production of marketable products from 
agricultural commoditie s.  The term shall also mean a 
dairy operation that requires a depreciable investment 
of at least Two Hundred Fifty Thousand Dollars 
($250,000.00) and which produces milk from dairy cows. 
The term does not include a facility th at provides 
only, and nothing more than, storage, cleaning, 
drying, or transportation of agricultural commodities, 
and   
 
 
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b. “Facility” means each part of the facility which is 
used in a process primarily for: 
(1) the processing of agricultural commodities , 
including receiving or storing agricultural 
commodities, or the production of milk at a dairy 
operation, 
(2) transporting the agricultural commodities or 
product before, during , or after the processing, 
or 
(3) packaging or otherwise preparing the product fo r 
sale or shipment. 
7.  Despite any provision to the contrary in paragraph 3 of this 
subsection, for taxable years begin ning after December 31, 1999, in 
the case of a taxpayer wh ich has a farming loss, such farming loss 
shall be considered a net operating loss carryback in accordance 
with and to the extent of the Internal Revenue Code, 26 U.S.C., 
Section 172(b)(G).  However , the amount of the net operating loss 
carryback shall not exceed the lesser of: 
a. Sixty Thousand Dollars ($60,000.00), or 
b. the loss properly shown on Schedule F of the Internal 
Revenue Service Form 1040 reduced by one-half (1/2) of 
the income from all other sources other than reflected 
on Schedule F.   
 
 
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8.  In taxable years beginning after December 31, 1995, all 
qualified wages equal to t he federal income tax cre dit set forth in 
26 U.S.C.A., Section 4 5A, shall be deducted from taxable income.  
The deduction allowed pursuant to this paragraph shall only be 
permitted for the tax years in which the federal tax credit pursuant 
to 26 U.S.C.A., Section 45A, is allowed. For purposes of this 
paragraph, “qualified wages” means those wages used to calculate the 
federal credit pursuant to 26 U.S.C.A., Section 45A. 
9.  In taxable years beginning after December 31, 2005, an 
employer that is eligible fo r and utilizes the Safet y Pays OSHA 
Consultation Service provide d by the Oklahoma Department of Labor 
shall receive an exemption from taxable income in the amount of One 
Thousand Dollars ($1,000.00) for the tax year that the service is 
utilized. 
10.  For taxable years beginning on or after January 1, 2010, 
there shall be added to Oklahoma taxable income an amount equal to 
the amount of deferred income not included in such taxable income 
pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986 
as amended by Section 1231 of the American Recovery and Reinvestment 
Act of 2009 (P.L. No. 111-5).  There shall be subtracte d from 
Oklahoma taxable income an amount equal to the amount of deferred 
income included in such taxable income pursuant to Section 108( i)(1) 
of the Internal Revenue Code by Section 1231 of the Americ an 
Recovery and Reinvestment Act of 2009 (P.L. No. 111-5).   
 
 
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11.  For taxable years beginning on or after Ja nuary 1, 2019, 
there shall be subtracted from Oklahoma taxable income or adjusted 
gross income any item of i ncome or gain, and there shall be added to 
Oklahoma taxable income or adjusted gross income any it em of loss or 
deduction that in the absence of an election pursuant to the 
provisions of the Pass-Through Entity Tax Equity Act of 2019 would 
be allocated to a member or to an indirect member of an el ecting 
pass-through entity pursuant to Section 2351 et s eq. of this title, 
if (i) the electing pass -through entity has accounted for such item 
in computing its Oklahoma net entity income or lo ss pursuant to the 
provisions of the Pass-Through Entity Tax Equ ity Act of 2019, and 
(ii) the total amount of tax attrib utable to any resulting Oklahoma 
net entity income has been paid.  The Oklahoma Tax Commission shall 
promulgate rules for the reporting of such exclusion to d irect and 
indirect members of the electing pass-through entity.  As used in 
this paragraph, “electing pass-through entity”, “indirect member”, 
and “member” shall be defined in the same manner as prescribed by 
Section 2355.1P-2 of this title.  Notwithstanding the application of 
this paragraph, the adjusted tax basis of any ownership interest in 
a pass-through entity for purposes o f Section 2351 et seq. of this 
title shall be equal to its adjusted tax basis for federal income 
tax purposes. 
12.  For tax year 2024 and subsequent tax years the re shall be 
deducted from Oklahoma taxable income or adjusted gross income an   
 
 
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amount equal to one hundred fifty percent (150 %) of wages paid to an 
employee while on leave pursuant to the Family Medical Leave Act of 
1993, 29 U.S.C., Section 2601 et seq.  To qualify for the de duction 
provided in this paragraph, the employer shall have paid wages for 
no less than four (4) weeks of leave taken, in an amount equivalent 
to that which the employee earned for work performed on a full-time 
basis and the employee shall be taking l eave for reasons of the 
birth of a child, or placement of a child with the employee for 
adoption or foster car e, and to bond with the new born or newly 
placed child. 
B.  1.  The taxable income of any corporation shall be furth er 
adjusted to arrive at Oklahoma taxable income, except those 
corporations electing treatment as provided in subchapter S of the 
Internal Revenue Code, 26 U.S.C., Section 1361 et seq., and Section 
2365 of this title, deductions pursuant to the provisions of the 
Accelerated Cost Recovery System as defined and al lowed in the 
Economic Recovery Tax Act of 1981, Public Law 97 -34, 26 U.S.C., 
Section 168, for depreciation of assets placed into service after 
December 31, 1981, shall not be allowed in calculating O klahoma 
taxable income.  Such corporations shall be allow ed a deduction for 
depreciation of assets placed into service after Dece mber 31, 1981, 
in accordance with provisions of the Internal Revenue Cod e, 26 
U.S.C., Section 1 et seq., in effect immediately prior to the 
enactment of the Accelerated Cost Recovery S ystem.  The Oklahoma tax   
 
 
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basis for all such assets placed into service a fter December 31, 
1981, calculated in this section shall be retained and utilized for 
all Oklahoma income tax purposes through the final disposition of 
such assets. 
Notwithstanding any other provisions of the Okl ahoma Income Tax 
Act, Section 2351 et seq. o f this title, or of the Internal Revenue 
Code to the contrary, this subs ection shall control calculation of 
depreciation of assets placed into service after December 31, 1981, 
and before January 1, 1983. 
For assets placed in service and held by a corporati on in which 
accelerated cost recovery system was previously disallowed, an 
adjustment to taxable income is required in the first taxable year 
beginning after December 31, 1982, to reco ncile the basis of such 
assets to the basis allowed in the Internal Reve nue Code.  The 
purpose of this adjustment is to equalize the basis and a llowance 
for depreciation accounts between that reported to the Internal 
Revenue Service and that reported to Ok lahoma. 
2.  For tax years be ginning on or after January 1, 2009, and 
ending on or before December 31, 2009, there shall be added to 
Oklahoma taxable income any amount in excess of One Hundred Seventy-
five Thousand Dollars ($175,000.00) which has been deduc ted as a 
small business expense under Internal Revenue Code, Section 179 as 
provided in the American Recovery and Reinvestment Act of 2009.   
 
 
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C.  1.  For taxable years beginning after December 31, 1987, the 
taxable income of any corporation shall be further adjusted to 
arrive at Oklahoma taxable income for transfers of technolog y to 
qualified small businesses located in Oklahoma.  Such transferor 
corporation shall be allowed an exemption from taxable income of an 
amount equal to the amount of royalty payment received as a result 
of such transfer; provided, however, such amount sh all not exceed 
ten percent (10%) of the amount of gross proceeds receive d by such 
transferor corporation as a result of the technology transfer.  Such 
exemption shall be allowed for a period not to exceed ten (10 ) years 
from the date of receipt of the firs t royalty payment accruing from 
such transfer.  No exemption may be clai med for transfers of 
technology to qualified small businesses made prior to January 1, 
1988. 
2.  For purposes of this subsection: 
a. “Qualified small business” means an entity, whether 
organized as a corporation, partnership, or 
proprietorship, organized f or profit with its 
principal place of business located within this state 
and which meets the following criteria: 
(1) Capitalization capitalization of not more than 
Two Hundred Fifty Thousand Dolla rs ($250,000.00),   
 
 
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(2) Having having at least fifty percent (50%) of its 
employees and assets located in Oklahoma at the 
time of the transfer, and 
(3) Not not a subsidiary or affiliate of the 
transferor corporation; 
b. “Technology” means a proprietary proce ss, formula, 
pattern, device, or compilation of scientific or 
technical information which is not in the public 
domain; 
c. “Transferor corporation” means a corporation which is 
the exclusive and undi sputed owner of the technolog y 
at the time the transfer is made; and 
d. “Gross proceeds” means the total amount of 
consideration for the transfer of technology, whether 
the consideration is in money or otherwise. 
D.  1.  For taxable years beginning after D ecember 31, 2005, the 
taxable income of any corporation, e state, or trust, shall be 
further adjusted for qualifying gains receiving capi tal treatment.  
Such corporations, estates , or trusts shall be allowed a deduction 
from Oklahoma taxable income for the amount of qualifying gains 
receiving capital treatment ear ned by the corporation, estate, or 
trust during the taxable year and included in the federal taxable 
income of such corporat ion, estate, or trust. 
2.  As used in this subsection:   
 
 
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a. “qualifying gains receiving capital treatment ” means 
the amount of net cap ital gains, as defined in Section 
1222(11) of the Internal Revenue Code, inclu ded in the 
federal income tax return of the cor poration, estate, 
or trust that result from: 
(1) the sale of real property or tangible personal 
property located within Oklahoma th at has been 
directly or indirectly owned by the corporation, 
estate, or trust for a holding period of at least 
five (5) years prior to the date of the 
transaction from which such net capital gains 
arise, 
(2) the sale of stock or on the sale of an ownership 
interest in an Oklah oma company, limited 
liability company, or partnership wh ere such 
stock or ownership interest has been dir ectly or 
indirectly owned by the corporation, estate, or 
trust for a holding period of at least three (3) 
years prior to the date of the transaction fr om 
which the net capital gains arise, or 
(3) the sale of real property, tangible personal 
property, or intangible personal property located 
within Oklahoma as part of the sale of all or 
substantially all of the assets of an Oklahoma   
 
 
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company, limited liabili ty company, or 
partnership where such property has been directly 
or indirectly owned by such entity owned by the 
owners of such entity, and used in or derived 
from such entity for a period of at least three 
(3) years prior to the dat e of the transaction 
from which the net capital gains arise, 
b. “holding period” means an uninterrupted period of 
time.  The holding period shall inclu de any additional 
period when the property was held by another 
individual or entity, if such additional p eriod is 
included in the taxpayer’s holding period for the 
asset pursuant to the Internal Revenue Code, 
c. “Oklahoma company”, “limited liability compa ny”, or 
“partnership” means an entity whose primary 
headquarters have been located in Oklahoma for at 
least three (3) uninterrup ted years prior to the date 
of the transaction from which the net capital gains 
arise, 
d. “direct” means the taxpayer directly o wns the asset, 
and 
e. “indirect” means the taxpayer owns an interest in a 
pass-through entity (or chain o f pass-through   
 
 
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entities) that sells the asset that gives rise to the 
qualifying gains receiving capital treatment. 
(1) With respect to sales of real pr operty or 
tangible personal property located within 
Oklahoma, the deduction described in this 
subsection shall not apply unless the pass-
through entity that makes the sale has held the 
property for not less than five (5) uninterrupt ed 
years prior to the da te of the transaction that 
created the capital gain, and each pass -through 
entity included in the chain o f ownership has 
been a member, partner, or shareholder of the 
pass-through entity in the tier immediately below 
it for an uninterrupted period of not l ess than 
five (5) years. 
(2) With respect to sales of stock or ownership 
interest in or sales of all or s ubstantially all 
of the assets of an Oklahoma company, limited 
liability company, or partnership, the deduction 
described in this subsection shall not apply 
unless the pass-through entity that makes the 
sale has held the stock or ownership interest or 
the assets for not less tha n three (3) 
uninterrupted years prior to the date of the   
 
 
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transaction that created the capital gain, and 
each pass-through entity included in the chain of 
ownership has been a member, partner or 
shareholder of the pass -through entity in the 
tier immediately below it for an uninterrupted 
period of not less than three (3) years. 
E.  The Oklahoma adjusted gross income of any individual 
taxpayer shall be further adjusted as follows to arrive at Oklahoma 
taxable income: 
1.  a. In the case of individuals, there sha ll be added or 
deducted, as the case may be, the difference necessary 
to allow personal exemptions of One Thousand Dollars 
($1,000.00) in lieu of the personal exemptions allowed 
by the Internal Revenue Code. 
b. There shall be allow ed an additional exemptio n of One 
Thousand Dollars ($1,000.00) for each taxpayer or 
spouse who is blind at the close of the tax year.  For 
purposes of this subparagraph, an individual is blind 
only if the central visual acuity of the individual 
does not exceed 20/200 in the better eye with 
correcting lenses, or if the visual acuity of the 
individual is greater than 20/200, but is accompanied 
by a limitation in the fields of vision such that the   
 
 
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widest diameter of the visual field subtends an angle 
no greater than twenty (20) degree s. 
c. There shall be allowed an additional exemption of One 
Thousand Dollars ($1,000.00) for each taxpayer or 
spouse who is sixty-five (65) years of age or older at 
the close of the tax year based upon the filing status 
and federal adjusted gross income of the taxpayer.  
Taxpayers with the following filing status may claim 
this exemption if the federal adjusted gross income 
does not exceed: 
(1) Twenty-five Thousand Dollars ($25,000.00) if 
married and filing jointly ;, 
(2) Twelve Thousand Five Hundred Dollars ($12,500.00) 
if married and filing separately;, 
(3) Fifteen Thousand Dollars ($15,000.00) if single;, 
and 
(4) Nineteen Thousand Do llars ($19,000.00) if a 
qualifying head of household. 
Provided, for taxable years beginning after De cember 
31, 1999, amounts in cluded in the calculation of 
federal adjusted gross income pursuant to the 
conversion of a traditional individual retirement 
account to a Roth individual retir ement account shall 
be excluded from federal adjusted gross income for   
 
 
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purposes of the income thr esholds provided in this 
subparagraph. 
2.  a. For taxable years beginning on or before December 31, 
2005, in the case of individua ls who use the standard 
deduction in determining taxable income, there shall 
be added or deducted, as the case may be, the 
difference necessary to allow a standard deduction in 
lieu of the standard deduction allowed by the Internal 
Revenue Code, in an amou nt equal to the larger of 
fifteen percent (15%) of the Oklahoma adjusted gross 
income or One Thousand Dollars ($1,000.00), bu t not to 
exceed Two Thousand Dollars ($2,000.00), except that 
in the case of a married individual filing a separate 
return such deduction shall be the larger of fifteen 
percent (15%) of such Oklahoma adjusted gross income 
or Five Hundred Dollars ($500.00), but not to exceed 
the maximum amount of One Thousand Dollars 
($1,000.00). 
b. For taxable years beginning on or after January 1, 
2006, and before January 1, 2007 , in the case of 
individuals who use the standard deduction in 
determining taxable income, ther e shall be added or 
deducted, as the case may be, the difference necessary 
to allow a standard deduction in lieu of the standard   
 
 
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deduction allowed by the Interna l Revenue Code, in an 
amount equal to: 
(1) Three Thousand Dollars ($ 3,000.00), if the filing 
status is married filing joint, head of 
household, or qualifying widow;, or 
(2) Two Thousand Dollars ($2,000.00), if the filing 
status is single or married filing se parate. 
c. For the taxable year beginning on January 1, 2007, and 
ending December 31, 2007, i n the case of individuals 
who use the standard deduction in determining taxable 
income, there shall be added or deducted, as the case 
may be, the difference necess ary to allow a standard 
deduction in lieu of the standard deductio n allowed by 
the Internal Revenue Code, in an amount equal to: 
(1) Five Thousand Five Hundred Dollars ($5,500.00), 
if the filing status is married filing joint or 
qualifying widow; or, 
(2) Four Thousand One Hundred Twenty -five Dollars 
($4,125.00) for a hea d of household;, or 
(3) Two Thousand Seven Hundred Fifty Dollars 
($2,750.00), if the filing status is single or 
married filing separate. 
d. For the taxable year b eginning on January 1, 2008, a nd 
ending December 31, 2008, in the case of individuals   
 
 
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who use the standard deduction in d etermining taxable 
income, there shall be added or deducted, as the case 
may be, the difference necessary to allo w a standard 
deduction in lieu of the standard deduc tion allowed by 
the Internal Revenue Code, in an amount equal to : 
(1) Six Thousand Five Hun dred Dollars ($6,500.00), if 
the filing status is married filing joint or 
qualifying widow, or 
(2) Four Thousand Eight Hundred Seventy -five Dollars 
($4,875.00) for a head of household, or 
(3) Three Thousand Two Hundred Fifty Doll ars 
($3,250.00), if the fil ing status is single or 
married filing separate. 
e. For the taxable year beginning on January 1, 2009, and 
ending December 31, 2009, in the case of individuals 
who use the standard deduction in determining taxable 
income, there shall be added or deducted, as the case 
may be, the difference necessary to allow a standard 
deduction in lieu of the standard deduction allo wed by 
the Internal Revenue Code, in an amount equal to: 
(1) Eight Thousand Five Hundred Dollars ($8,500.00), 
if the filing status is married f iling joint or 
qualifying widow, or   
 
 
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(2) Six Thousand Three Hundred Seventy-five Dollars 
($6,375.00) for a head of household, or 
(3) Four Thousand Two Hundred Fifty D ollars 
($4,250.00), if the filing status is single or 
married filing separate. 
Oklahoma adjusted gross income shall be increased by 
any amounts paid for motor vehicle excise taxes which 
were deducted as allowed by the Internal Revenue Code. 
f. For taxable years beginning on or after January 1, 
2010, and ending on Decem ber 31, 2016, in the case o f 
individuals who use the standard deduction in 
determining taxable income, there shall be added or 
deducted, as the case may be, the d ifference necessary 
to allow a standard deduction equal to the standard 
deduction allowed by t he Internal Revenue Code, b ased 
upon the amount and filing status prescribed by such 
Code for purposes of filing federal individual income 
tax returns. 
g. For taxable years beginning on or aft er January 1, 
2017, in the case of individuals who use the stand ard 
deduction in determinin g taxable income, there shall 
be added or deducted, as the case may be, the 
difference necessary to allow a stand ard deduction in   
 
 
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lieu of the standard deduction allo wed by the Internal 
Revenue Code, as follows: 
(1) Six Thousand Three Hundred Fifty Dollars 
($6,350.00) for single or married filing 
separately, 
(2) Twelve Thousand Seven Hundred Dollars 
($12,700.00) for married filing jointly or 
qualifying widower with dep endent child, and 
(3) Nine Thousand Three Hundred Fifty Dollars 
($9,350.00) for head of hou sehold. 
3.  a. In the case of resident and part-year resident 
individuals having adjusted gross income from source s 
both within and with out the state, the itemized or 
standard deductions and personal exemptions shall be 
reduced to an amount which is the s ame portion of the 
total thereof as Oklahoma adjusted gross income is of 
adjusted gross income.  To the extent item ized 
deductions include allowable moving expense, pr oration 
of moving expense shall not be required or permitted 
but allowable moving expense shall be fully deductible 
for those taxpayers moving within or into Oklahoma and 
no part of moving expense shall b e deductible for 
those taxpayers moving without or o ut of Oklahoma.  
All other itemized or standard deductions and personal   
 
 
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exemptions shall be subject to proration as provided 
by law. 
b. For taxable years beginning on or after January 1, 
2018, the net amount of itemized deduct ions allowable 
on an Oklahoma income tax return, subject to the 
provisions of paragraph 24 o f this subsection, shall 
not exceed Seventeen Thousand Dollars ($17,000.00).  
For purposes of this subparagraph, charitable 
contributions and medical expenses deduc tible for 
federal income tax p urposes shall be excluded from the 
amount of Seventeen Thousan d Dollars ($17,000.00) as 
specified by this subparagraph. 
4. A resident individual with a physical disability 
constituting a substantial hand icap to employment may deduct from 
Oklahoma adjusted gross income such expenditures to modify a motor 
vehicle, home, or workplace as are nece ssary to compensate for his 
or her handicap.  A veteran certified by the Department of Veterans 
Affairs of the feder al government as havin g a service-connected 
disability shall be conclusively presumed to be an individual with a 
physical disability constit uting a substantial handicap to 
employment.  The Tax Commission shall promulgate rules containing a 
list of combinations of common disabil ities and modifications which 
may be presumed to qualify for this deduction.  The Tax Commi ssion 
shall prescribe neces sary requirements for verification.   
 
 
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5.  a. Before July 1, 2010, the first One Thousand Five 
Hundred Dollars ($1,500.0 0) received by any per son 
from the United States as salary or compensation in 
any form, other than retirement b enefits, as a member 
of any component of the Armed Forces of the United 
States shall be deducted from taxable income. 
b. On or after July 1, 2010 , one hundred percent (100%) 
of the income received by any person from the United 
States as salary or compensat ion in any form, other 
than retirement benefits, as a member of any component 
of the Armed Forces of the United States shall be 
deducted from taxable income. 
c. Whenever the filing of a timely inco me tax return by a 
member of the Armed Forces of the United States is 
made impracticable or impossible of accomplishment by 
reason of: 
(1) absence from the United States, which term 
includes only the stat es and the District of 
Columbia;, 
(2) absence from the State of Oklahoma this state 
while on active duty ;, or 
(3) confinement in a hospita l within the United 
States for treatment of wounds, injuries, or 
disease,   
 
 
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the time for filing a return and paying an income tax 
shall be and is hereby ext ended without incurring 
liability for interest or penalties, to the fifteen th 
day of the third month f ollowing the month in which: 
(a) Such such individual shall return to the 
United States if the extension is granted 
pursuant to subparagr aph a of this 
paragraph, return to the State of Oklahoma 
this state if the extension is gran ted 
pursuant to subparagrap h b of this paragraph 
or be discharged from such hospital if the 
extension is granted pursuant to 
subparagraph c of this paragraph;, or 
(b) An an executor, administrator, or 
conservator of the estate of t he taxpayer is 
appointed, whichever event occurs the 
earliest. 
Provided, that the Tax Commission may, in its discretion, grant 
any member of the Armed Forces of the United States an extension of 
time for filing of income tax r eturns and payment of income t ax 
without incurring liab ilities for interest or pen alties.  Such 
extension may be granted only when in the judgment of the Tax 
Commission a good cause exists therefor and may be for a period in   
 
 
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excess of six (6) months.  A re cord of every such extension g ranted, 
and the reason therefor, shall be kept. 
6.  Before July 1, 2010, the salary o r any other form of 
compensation, received from the United States by a member of any 
component of the Armed Forces of t he United States, shal l be 
deducted from taxable inc ome during the time in wh ich the person is 
detained by the enemy in a conflict, is a prisoner of war or is 
missing in action and not deceased; provided, after July 1, 2010, 
all such salary or compensation shall be subject to t he deduction as 
provided pursuant to paragraph 5 of thi s subsection. 
7.  a. An individual taxpayer, whether reside nt or 
nonresident, may deduct an amount equal to the federal 
income taxes paid by the taxpayer during the taxable 
year. 
b. Federal taxes as des cribed in subparagraph a of th is 
paragraph shall be d eductible by any individual 
taxpayer, whether resident or no nresident, only to the 
extent they relate to income subject to taxation 
pursuant to the provisions of the Oklahoma Income Tax 
Act.  The maximum amount allowable in the prece ding 
paragraph shall be prorated on the ratio of t he 
Oklahoma adjusted gross income to federal adjusted 
gross income.   
 
 
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c. For the purpose of this paragraph, “federal income 
taxes paid” shall mean federal i ncome taxes, surtaxes 
imposed on incomes or excess p rofits taxes, as though 
the taxpayer was on the ac crual basis.  In determining 
the amount of deduction for federal income taxes for 
tax year 2001, the amount of the deduction shall not 
be adjusted by the amount of any accelera ted ten 
percent (10%) tax rate bracket credit or adva nced 
refund of the credit r eceived during the tax year 
provided pursuant to the federal Economic Growth and 
Tax Relief Reconciliation Act of 2001, P.L. No. 107-
16, and the advanced refund of such credit shall not 
be subject to taxati on. 
d. The provisions of this paragraph shall appl y to all 
taxable years ending aft er December 31, 1978, and 
beginning before January 1, 2006. 
8.  Retirement benefits not to exceed Five Thousand Five Hund red 
Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five 
Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand 
Dollars ($10,000.00) for the 2006 tax year and all subsequent tax 
years, which are received by an individual from the civi l service of 
the United States, the Oklahoma Public Employees Retirement Sy stem, 
the Teachers’ Retirement System of Oklahoma, the Oklah oma Law 
Enforcement Retirement System, the Oklahoma Firefighters Pension and   
 
 
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Retirement System, the Oklahoma Police Pensi on and Retirement 
System, the employee retirement sy stems created by counti es pursuant 
to Section 951 et seq. of Title 19 of the Oklaho ma Statutes, the 
Uniform Retirement System for Justices and Judges, the Oklahoma 
Wildlife Conservation Department Retirem ent Fund, the Oklahoma 
Employment Security Commissio n Retirement Plan, or the employee 
retirement systems created by municipalities pur suant to Section 48-
101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt 
from taxable income. 
9.  In taxable years beginning after December 3l, 1984, Social 
Security benefits received by an individual shall be e xempt from 
taxable income, to the extent such benefits are included in the 
federal adjusted gross income pursuant to the provisions of Section 
86 of the Internal Revenue Code, 26 U.S.C., Section 86. 
10.  For taxable years beginni ng after December 31, 1994, lump-
sum distributions from empl oyer plans of deferred compensation, 
which are not qualified plans within the meaning of Section 401(a) 
of the Internal Revenue Code, 26 U.S.C. , Section 401(a), and which 
are deposited in and acco unted for within a separate bank account or 
brokerage account in a financial institution within this state, 
shall be excluded from taxable income in the same manner as a 
qualifying rollover contribution to an individual retirement ac count 
within the meaning of Section 408 of the Int ernal Revenue Code, 26 
U.S.C., Section 408.  Amounts withdrawn from such bank or brokerage   
 
 
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account, including any earnings thereon, shall be included in 
taxable income when wit hdrawn in the same manner as w ithdrawals from 
individual retirement accounts wit hin the meaning of Section 408 of 
the Internal Revenue Code. 
11.  In taxable years beginning after December 31, 1995, 
contributions made to and interest r eceived from a medical savings 
account established p ursuant to Sections 262 1 through 2623 of Title 
63 of the Oklahoma Statutes shall be exempt from taxable income. 
12.  For taxable years beginning after December 31, 1996, the 
Oklahoma adjusted gross income of any individual tax payer who is a 
swine or poultry producer may be furth er adjusted for the deducti on 
for depreciation allowed for n ew construction or expansion costs 
which may be computed using the same depreciation method elected for 
federal income tax purposes except that the useful life shall be 
seven (7) years for purpose s of this paragraph.  If de preciation is 
allowed as a deduction in determining the adjusted gross income of 
an individual, any depreciation calculated and claimed pursuant to 
this section shall in no eve nt be a duplication of any dep reciation 
allowed or permitted on the federal inco me tax return of the 
individual. 
13. a. In taxable years beginning after December 31, 2002, 
nonrecurring adoption expenses paid by a resident 
individual taxpayer in connection with: 
(1) the adoption of a mi nor, or   
 
 
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(2) a proposed adoption of a minor which d id not 
result in a decreed adopti on, 
may be deducted from the Oklahoma adjusted gross 
income. 
b. The deductions for adoptions and proposed adoptions 
authorized by this paragrap h shall not exceed Twenty 
Thousand Dollars ($20,000.0 0) per calendar year. 
c. The Tax Commission shall promulgate rules to implement 
the provisions of this paragraph which shall contain a 
specific list of nonrecurring adoption expense s which 
may be presumed to qualify for the deduction . The Tax 
Commission shall prescribe necessary re quirements for 
verification. 
d. “Nonrecurring adoption expenses” means adoption fees, 
court costs, medical expenses, attorney fees, and 
expenses which are directly related to th e legal 
process of adoption of a child including, bu t not 
limited to, costs rel ating to the adoption study, 
health and psychological examinations, transportation, 
and reasonable costs of lodging and food for the child 
or adoptive parents which are incurred to complete the 
adoption process and are not reimbu rsed by other 
sources.  The term “nonrecurring adoption expe nses” 
shall not include attorney fees incurred for the   
 
 
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purpose of litigating a contested adoption, from and 
after the point of the initiation of the contest, 
costs associated with physical remodel ing, renovation 
and alteration of the adoptive parents’ home or 
property, except for a special needs child as 
authorized by the court. 
14.  a. In taxable years beginning before January 1, 2005, 
retirement benefits not to exceed the amou nts 
specified in this paragraph, which are rec eived by an 
individual sixty-five (65) years of age or older and 
whose Oklahoma adjusted gross income is Twenty-five 
Thousand Dollars ($25,000.00) or less if the filing 
status is single, head of household, or m arried filing 
separate, or Fifty Thousand Doll ars ($50,000.00) or 
less if the filing status is married filing joint or 
qualifying widow, shall be exempt from taxable income.  
In taxable years beginning af ter December 31, 2004, 
retirement benefits not to ex ceed the amounts 
specified in this paragraph, which are received by an 
individual whose Oklahoma adjusted gross income is 
less than the qualifying amount specified in this 
paragraph, shall be exempt from taxable income. 
b. For purposes of this paragraph, t he qualifying amount 
shall be as follows:   
 
 
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(1) in taxable years beginning after December 31, 
2004, and prior to January 1, 2007, the 
qualifying amount shall be Thirty-seven Thousand 
Five Hundred Dollars ($ 37,500.00) or less if the 
filing status is single, h ead of household, or 
married filing separate, or Seventy-five Thousand 
Dollars ($75,000.00) or less if the filing status 
is married filing jointly or qualifying widow, 
(2) in the taxable year beginning Ja nuary 1, 2007, 
the qualifying amount shall be Fifty Thousand 
Dollars ($50,000.00) or less if the f iling status 
is single, head of h ousehold, or married filing 
separate, or One Hundred Thousand Dollars 
($100,000.00) or less if the filing status is 
married filing jointly or quali fying widow, 
(3) in the taxable year beginning January 1, 2008, 
the qualifying amount shall be Sixty-two Thousand 
Five Hundred Dollars ($62,500.00) or less if the 
filing status is single, head of household, or 
married filing separate, or One Hundred Twenty -
five Thousand Dollars ($125,0 00.00) or less if 
the filing status is married filing jointly or 
qualifying widow,   
 
 
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(4) in the taxable year beginning January 1, 2009, 
the qualifying amount shall be One Hundred 
Thousand Dollars ($100,000. 00) or less if the 
filing status is single, head of household, or 
married filing separate, or Two Hundred Thousand 
Dollars ($200,000.00) or less if the filing 
status is married filing jointly or qualifying 
widow, and 
(5) in the taxable year beginning Janua ry 1, 2010, 
and subsequent taxable years, there shal l be no 
limitation upon the qualifying amount. 
c. For purposes of this paragrap h, “retirement benefits” 
means the total distributions or withdrawals from the 
following: 
(1) an employee pension benefit pla n which satisfies 
the requirements of Section 401 of the Internal 
Revenue Code, 26 U.S.C., Section 401, 
(2) an eligible deferred co mpensation plan that 
satisfies the requirements of Section 457 of the 
Internal Revenue Code, 26 U.S.C., Section 457, 
(3) an individual retirement a ccount, annuity or 
trust, or simplified employee pension that 
satisfies the requirements of Section 408 of th e 
Internal Revenue Code, 26 U.S.C., Section 408,   
 
 
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(4) an employee annuity subject to the provisions of 
Section 403(a) or (b) of the Internal Revenue 
Code, 26 U.S.C., Section 403(a ) or (b), 
(5) United States Retirement Bonds which satisfy the 
requirements of Section 86 of the Internal 
Revenue Code, 26 U.S.C., Section 86, or 
(6) lump-sum distributions from a retirement plan 
which satisfies the requiremen ts of Section 
402(e) of the Internal Revenue Code, 26 U.S.C., 
Section 402(e). 
d. The amount of the exemption provided by this paragraph 
shall be limited to Five Thousand Five Hundre d Dollars 
($5,500.00) for the 2004 tax year, Seven Th ousand Five 
Hundred Dollars ($7,500.00) for the 2005 tax year and 
Ten Thousand Dollars ($10,000.0 0) for the tax year 
2006 and for all subsequent tax years.  Any individual 
who claims the exemption provid ed for in paragraph 8 
of this subsection shall not be permitted to claim a 
combined total exemption pursu ant to this paragraph 
and paragraph 8 of this subsection in an amount 
exceeding Five Thousand Five Hundred Dollars 
($5,500.00) for the 2004 tax year, S even Thousand Five 
Hundred Dollars ($7,500.00) for th e 2005 tax year and   
 
 
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Ten Thousand Dollars ($10,000.00 ) for the 2006 tax 
year and all subsequent ta x years. 
15.  In taxable years be ginning after December 31, 1999, for an 
individual engaged in production agriculture who has filed a 
Schedule F form with the taxpayer’s federal income tax return for 
such taxable year, there shall be excluded from taxable income any 
amount which was inclu ded as federal taxable income or federal 
adjusted gross income and which consists of the discharge of an 
obligation by a credi tor of the taxpayer in curred to finance the 
production of agricultural products. 
16.  In taxable years beginning December 31, 2000 , an amount 
equal to one hundred percent (100%) of the amount of any scho larship 
or stipend received from participation in the Oklahoma Police Corps 
Program, as established in Se ction 2-140.3 of Title 47 of the 
Oklahoma Statutes shall be exempt from taxabl e income. 
17. a. In taxable years beginning after December 31, 2001, 
and before January 1, 2005, there shall be allowed a 
deduction in the amount of contributions to accounts 
established pursuant to the Oklahoma College Sav ings 
Plan Act.  The deduction sha ll equal the amount of 
contributions to accounts, but in no event shall t he 
deduction for each contributor exceed Two Thousand 
Five Hundred Dollars ($2,500.00) each taxable year for 
each account.   
 
 
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b. In taxable years beginni ng after December 31, 2004, 
each taxpayer shall be allowed a deduction for 
contributions to accounts estab lished pursuant to the 
Oklahoma College Savings Plan Act.  The maximum annu al 
deduction shall equal the a mount of contributions to 
all such accounts plus any contributions to such 
accounts by the taxpayer for prior taxable years after 
December 31, 2004, wh ich were not deducted, but in no 
event shall the dedu ction for each tax yea r exceed Ten 
Thousand Dollars ($10,000.00) for each individual 
taxpayer or Twenty Thousand Dollars ($20,000. 00) for 
taxpayers filing a joint return.  Any amount of a 
contribution that is not deducted by the taxpayer in 
the year for which the contribution i s made may be 
carried forward as a deduction from income for the 
succeeding five (5) years.  For taxable yea rs 
beginning after December 31, 2005, deductions may be 
taken for contributions and rollovers made during a 
taxable year and up to April 15 of the s ucceeding 
year, or the due dat e of a taxpayer’s state income tax 
return, excluding extensions, whichever is later.  
Provided, a deduction for the same contribution may 
not be taken for two (2) different taxable years.   
 
 
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c. In taxable years beginning after De cember 31, 2006, 
deductions for contributions made pursuant to 
subparagraph b of this paragraph shall be lim ited as 
follows: 
(1) for a taxpayer who qualified for the five-year 
carryforward election and who takes a rollover or 
nonqualified withdrawal during that period, the 
tax deduction otherwise available pursuant to 
subparagraph b of this paragraph shall be r educed 
by the amount which is equal to the rollover or 
nonqualified withdrawal, and 
(2) for a taxpayer who elects to take a rol lover or 
nonqualified withdrawal within the same tax year 
in which a contribution was made to the 
taxpayer’s account, the tax de duction otherwise 
available pursuant to subparagraph b of this 
paragraph shall be reduced by the amount of the 
contribution which is equal to the roll over or 
nonqualified withdrawa l. 
d. If a taxpayer elects to take a rollover on a 
contribution for which a deduction has been taken 
pursuant to subparagraph b of this paragraph withi n 
one (1) year of the date of contribution, the amoun t 
of such rollover sha ll be included in the adjusted   
 
 
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gross income of the taxpayer in the taxable year of 
the rollover. 
e. If a taxpayer makes a nonqualified withdrawal of 
contributions for which a deduct ion was taken pursuant 
to subparagraph b of this para graph, such nonqualifi ed 
withdrawal and any earnings thereon shall be included 
in the adjusted gross income of the taxpayer in the 
taxable year of the nonqualified withdrawal. 
f. As used in this paragrap h: 
(1) “non-qualified withdrawal” means a withdrawal 
from an Oklahoma Colle ge Savings Plan account 
other than one of the following: 
(a) a qualified withdrawal, 
(b) a withdrawal made as a result of the death 
or disability of the designated beneficiary 
of an account, 
(c) a withdrawal that is made on the accoun t of 
a scholarship or the allowance or payment 
described in Section 135(d)(1)(B) or (C) or 
by the Internal Revenue Code, received by 
the designated beneficiary to the extent the 
amount of the refund does not exceed the 
amount of the scholarship, allowance, or 
payment, or   
 
 
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(d) a rollover or change of designat ed 
beneficiary as permitted by subsection F o f 
Section 3970.7 of Title 70 of Oklahoma 
Statutes, and 
(2) “rollover” means the transfer of funds from the 
Oklahoma College Savings Plan to any other plan 
under Section 529 of the I nternal Revenue Code. 
18.  For tax years 2006 through 2021, retirement benefits 
received by an individual from any component of the Armed Forces of 
the United States in an amount no t to exceed the greater of seventy-
five percent (75%) of such benefits or Ten Thousand Dollars 
($10,000.00) shall be exempt from taxable income but in no case less 
than the amount of the exemption provided by paragraph 14 of t his 
subsection.  For tax year 2022 and subsequent tax yea rs, retirement 
benefits received by an individual from any component of the A rmed 
Forces of the United States shall be exem pt from taxable income. 
19.  For taxable years beginning after December 31, 2006, 
retirement benefits rece ived by federal civil servi ce retirees, 
including survivor annuities, paid in lieu of Social Security 
benefits shall be exempt from taxable income to the extent such 
benefits are included in the federal adjusted gross income p ursuant 
to the provisions of S ection 86 of the Internal R evenue Code, 26 
U.S.C., Section 86, according to the following schedule:   
 
 
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a. in the taxable year beginning January 1, 2007, twenty 
percent (20%) of such benefits shall be exempt, 
b. in the taxable year beginning January 1, 2008, f orty 
percent (40%) of such benefits shall be exempt, 
c. in the taxable year beginning January 1, 2009, s ixty 
percent (60%) of such benefits shall be e xempt, 
d. in the taxable year beginning January 1, 2010, eighty 
percent (80%) of such benefits shall be ex empt, and 
e. in the taxable year beginning January 1, 2011, and 
subsequent taxable years, one hundred pe rcent (100%) 
of such benefits shall be exempt. 
20.  a. For taxable years beginning after December 31, 2007, a 
resident individual may deduct up to Ten Th ousand 
Dollars ($10,000.00) from Oklahoma adjusted gross 
income if the individual, or the dependent of t he 
individual, while living, donates one or m ore human 
organs of the individual to another human being for 
human organ transplantation.  As used in this 
paragraph, “human organ” means all or part of a liver, 
pancreas, kidney, intestine, lung, or bone marro w. A 
deduction that is claimed under this pa ragraph may be 
claimed in the taxable year in which the human organ 
transplantation occurs.   
 
 
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b. An individual may claim this deduction only once, and 
the deduction may be claimed only for unreimbursed 
expenses that are incurred by the individual and 
related to the organ donation of the individual. 
c. The Oklahoma Tax Commission shal l promulgate rules to 
implement the provisions of this pa ragraph which shall 
contain a specific list of expenses which may be 
presumed to qualify for the deduction.  The Tax 
Commission shall prescribe necessary requirements for 
verification. 
21.  For taxable years beginning after Decem ber 31, 2009, there 
shall be exempt from taxable income any amount received by the 
beneficiary of the de ath benefit for an emergency medical technici an 
or a registered emergency medical responder provided by Section 1-
2505.1 of Title 63 of the Oklahoma Sta tutes. 
22.  For taxable yea rs beginning after December 31, 2008, 
taxable income shall be increased by any unemployment compensation 
exempted under Section 85(c) of the Internal Revenue Code, 26 
U.S.C., Section 85(c)(2009). 
23.  For taxable years beginning after December 31, 2008, th ere 
shall be exempt from taxable income any payment in an amou nt less 
than Six Hundred Dollars ($600.00) received by a per son as an award 
for participation in a competitive livestock show event.  For 
purposes of this paragraph, t he payment shall be treated as a   
 
 
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scholarship amount paid by the entity sponsoring the eve nt and the 
sponsoring entity shall cause the payment to be c ategorized as a 
scholarship in its books and records. 
24.  For taxable years beginning on or after January 1, 2016, 
taxable income shall be increased by any amount of state and local 
sales or income taxes deducted under 26 U.S.C., Section 164 of the 
Internal Revenue Code.  If the amount of state and local taxes 
deducted on the fede ral return is limited, taxable income on the 
state return shall be increased only by the amount actually deducted 
after any such limitations are applied. 
25.  For taxable years be ginning after December 31, 2020, each 
taxpayer shall be allowed a deduction f or contributions to accounts 
established pursuant to the Achieving a Better Life Experience 
(ABLE) Program as established in Section 40 01.1 et seq. of Title 56 
of the Oklahoma Statutes.  For any tax year, the deduction provided 
for in this paragraph shall not exceed Ten Thousand Dollar s 
($10,000.00) for an individual taxpayer or Twenty Thousand Dollars 
($20,000.00) for taxpayers filing a joint return.  Any amount of 
contribution not deducted by the taxpayer in the tax year for which 
the contribution is made may be carried forward as a d eduction from 
income for up to five (5) tax years.  Deductions may be taken for 
contributions made during the tax year and through April 15 of the 
succeeding tax year, or through the due date of a taxpayer’s state 
income tax return excluding extensions, wh ichever is later.   
 
 
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Provided, a deduction for the same contribution may not be taken in 
more than one (1) tax year. 
F.  1.  For taxable years beginnin g after December 31, 2004, a 
deduction from the Oklahoma adjusted gross income of any individual 
taxpayer shall be allowed for qualifyi ng gains receiving capital 
treatment that are includ ed in the federal adjuste d gross income of 
such individual taxpayer d uring the taxable year. 
2.  As used in this subsection: 
a. “qualifying gains receiving capital treatment” means 
the amount of net capit al gains, as defined in Section 
1222(11) of the Inte rnal Revenue Code, includ ed in an 
individual taxpayer’s federal income tax return that 
result from: 
(1) the sale of real property or tangible personal 
property located within Oklahoma that has been 
directly or indirectly owned by the individual 
taxpayer for a holding period of at least five 
(5) years prior to the date of the transaction 
from which such net capital gains arise, 
(2) the sale of stock or the sale of a direct or 
indirect ownership interest in an Oklahoma 
company, limited liability company, or 
partnership where such st ock or ownership 
interest has been directl y or indirectly owned by   
 
 
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the individual taxpayer for a holding period of 
at least two (2) years prior to the date of the 
transaction from which the net capital gains 
arise, or 
(3) the sale of real property, tangib le personal 
property, or intangible persona l property located 
within Oklahoma as part of the sale of all or 
substantially all of the assets of an Oklahoma 
company, limited liability company, or 
partnership, or an Oklahoma proprietorshi p 
business enterprise w here such property has been 
directly or indirectly owned by such entity or 
business enterprise or owned by the owners of 
such entity or business enterprise for a period 
of at least two (2) years prior to the date of 
the transaction from which the net capit al gains 
arise, 
b. “holding period” means an uninterrupted period of 
time.  The holding period shall include any additional 
period when the property was held by another 
individual or entity, if such additional period is 
included in the taxpayer’s holding period for the 
asset pursuant to the Internal Revenue Code,   
 
 
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c. “Oklahoma company,” company”, “limited liability 
company,” company”, or “partnership” means an entity 
whose primary headquarters have been located in 
Oklahoma for at least three ( 3) uninterrupted years 
prior to the date of the transaction from which the 
net capital gains arise, 
d. “direct” means the individual taxpayer directly owns 
the asset, 
e. “indirect” means the individual taxpayer owns an 
interest in a pass-through entity (or chain of pass-
through entities) that sells the asset that gives rise 
to the qualifying gains receiving capital treatment. 
(1) With respect to sales of real property or 
tangible personal property located within 
Oklahoma, the deduction described in this 
subsection shall not apply unless the pass-
through entity that makes the sale has held the 
property for not less than five (5) uninterrupted 
years prior to the date of the transaction tha t 
created the capital gain, and each pass-through 
entity included in the chain of ownership has 
been a member, partner, or sharehol der of the 
pass-through entity in the tier immediately below   
 
 
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it for an uninterrupted period of not less than 
five (5) years. 
(2) With respect to sales of sto ck or ownership 
interest in or sales of all or substantially all 
of the assets of an Oklahoma compa ny, limited 
liability company, partnership, or Oklahoma 
proprietorship business enterprise, the deduction 
described in this su bsection shall not apply 
unless the pass-through entity that makes the 
sale has held the stock or ownership interest for 
not less than two (2) uninterrupted years prior 
to the date of the transaction that created the 
capital gain, and each pass -through entity 
included in the chain of own ership has been a 
member, partner, or shareholder of the pass-
through entity in the tier immediately below it 
for an uninterrupted period of not less than two 
(2) years.  For purposes of this division, 
uninterrupted ownership prior to July 1, 2007, 
shall be included in the determination of the 
required holding period prescribed by this 
division, and 
f. “Oklahoma proprietorship business enterprise” means a 
business enterprise whose income and expenses have   
 
 
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been reported on Sche dule C or F of an individual 
taxpayer’s federal income tax return, or any similar 
successor schedule published by the Internal Revenue 
Service and whose primary headquarters have been 
located in Oklahoma for at least three (3) 
uninterrupted years prior to the date of the 
transaction from which the net capital gains arise. 
G.  1.  For purposes of computing its Oklahoma taxable income 
under this section, the dividends-paid deduction otherwise allowed 
by federal law in computing net income of a real estate inv estment 
trust that is subject to federal income tax shall be added bac k in 
computing the tax imposed by this state under this title if the real 
estate investment trust is a captive real estate investment trust. 
2.  For purposes of computing its Oklahoma ta xable income under 
this section, a taxpayer shall add back otherwise d eductible rents 
and interest expenses paid to a captive real estate investment trust 
that is not subject to the provisions of paragraph 1 of this 
subsection.  As used in this subsection: 
a. the term “real estate investment trust” or “REIT” 
means the meaning ascribed to such term in Section 856 
of the Internal Revenue Code, 
b. the term “captive real estate investment trust” means 
a real estate investment trust, the shares or 
beneficial interests of which are not regularl y traded   
 
 
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on an established securities market and more than 
fifty percent (50%) of the voting power or value of 
the beneficial interests or shares of which are owned 
or controlled, directly or indirectly, or 
constructively, by a single entity that is: 
(1) treated as an association taxable as a 
corporation under the Int ernal Revenue Code, and 
(2) not exempt from federal income tax pursuant t o 
the provisions of Section 501(a) of the Internal 
Revenue Code. 
The term shall not incl ude a real estate investment 
trust that is intended to be regularly tr aded on an 
established securities market, and that satisfies the 
requirements of Section 856(a)(5) and (6) of the U.S. 
Internal Revenue Code by reason of Section 856(h)(2) 
of the Internal Revenue Code, 
c. the term “association taxable as a corporation ” shall 
not include the following entities: 
(1) any real estate investment trust as defined in 
paragraph a of this subsection other than a 
“captive real estate investment trust”, or 
(2) any qualified real estate investment trust 
subsidiary under Section 856(i) of the Internal 
Revenue Code, other than a qualified REIT   
 
 
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subsidiary of a “captive captive real estate 
investment trust”, or trust, 
(3) any Listed Australian Property Trust (meaning an 
Australian unit trust registered as a “Managed 
Investment Scheme” under the Australian 
Corporations Act in which the principa l class of 
units is listed on a recognized stock exchange in 
Australia and is regularly traded on an 
established securities market), or an entity 
organized as a trust, provided th at a Listed 
Australian Property Trust owns or controls, 
directly or indirectl y, seventy-five percent 
(75%) or more of the voting power or value of the 
beneficial interests or shares of such trust, or 
(4) any Qualified Foreig n Entity, meaning a 
corporation, trust, association or partnership 
organized outside the laws of the United S tates 
and which satisfies the following criteria: 
(a) at least seventy-five percent (75%) of the 
entity’s total asset value at the close of 
its taxable year is represented by real 
estate assets, as defined in Section 
856(c)(5)(B) of the Internal Revenue Co de, 
thereby including shares or certificates of   
 
 
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beneficial interest in any real estate 
investment trust, cash and cash equivalents, 
and U.S. Government securities, 
(b) the entity receives a dividend-paid 
deduction comparable to Section 561 of the 
Internal Revenue Code, or is exempt from 
entity level tax, 
(c) the entity is required to distribute at 
least eighty-five percent (85%) of its 
taxable income, as computed in the 
jurisdiction in which it is organized, to 
the holders of its shares or certificates of 
beneficial interest on an annual basis, 
(d) not more than ten percent (10%) of the 
voting power or value in such entity is held 
directly or indirect ly or constructively by 
a single entity or individual, or the shares 
or beneficial interests of such entity a re 
regularly traded on an established 
securities market, and 
(e) the entity is organized in a country which 
has a tax treaty with the United States . 
3.  For purposes of this subse ction, the constructive ownership 
rules of Section 318(a) of the Internal Rev enue Code, as modified by   
 
 
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Section 856(d)(5) of the Internal Revenue Code, shall apply in 
determining the ownership of stock, assets, or net profits of any 
person. 
4.  A real estate investment trust that does not become 
regularly traded on an established se curities market within one (1) 
year of the date on which it first becomes a real estate investment 
trust shall be deemed not to have been regularly traded on an 
established securities market, retroactive to the date it first 
became a real estate investment trust, and shall file an amended 
return reflecting such retroactive designation for any tax year or 
part year occurring during its initial year of status as a real 
estate investment trust.  For purposes of this subsection, a re al 
estate investment trust b ecomes a real estate investment trust on 
the first day it has both met the requirements of Section 856 of the 
Internal Revenue Code and has elected to be treated as a real estate 
investment trust pursuant to Section 856(c)(1) of the Internal 
Revenue Code. 
SECTION 2.  This act shall become effective November 1, 2023. 
 
59-1-1555 QD 1/15/2023 9:22:21 PM