An Act
ENROLLED SENATE
BILL NO. 602 By: Rader of the Senate
and
Fetgatter of the House
An Act relating to revenue and taxation ; amending
Section 1, Chapter 343, O.S.L. 2022 (68 O.S . Supp.
2022, Section 2358.6a), which relates to bonus
depreciation; clarifying application of depreciation;
clarifying procedure for claiming depreciatio n;
authorizing filing of amended tax return under
certain conditions; prohibiting Oklahoma Tax
Commission from assessing penalties or interes t under
certain conditions; and providing an effective date.
SUBJECT: Income tax returns
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY Section 1, Chapter 343, O.S.L.
2022 (68 O.S. Supp. 2022, Section 2358.6a), is amended to read as
follows:
Section 2358.6a. A. As used in this section:
1. "Internal Revenue Code " means Title 26 of the U nited States
Code also known as the federal Inte rnal Revenue Code of 1986, as
amended;
2. "Tax Cuts and Jobs Act" means Public Law No. 115-97 (115th
Congress Public Law 97);
ENR. S. B. NO. 602 Page 2
3. "Qualified property" shall have the same meaning as in
Internal Revenue Code Section 168(k) as the Code existed on January
1, 2021, and shall apply to property placed in service after
December 31, 2021;
4. "Qualified improvement pro perty" shall have the same meaning
as in Internal Revenue Code Section 168(e)(6 ) as the Code existed on
January 1, 2021, and shall apply to prope rty placed in service after
December 31, 2021; and
5. "Full expensing" or "one hundred percent (100%) bonus
depreciation" means a method for taxpayers to recover costs for
certain expenditures in research and e xperimentation and depreciable
business assets by immediately deducting the full cost of suc h
expenditures in the tax year in which the cost is incurred or the
property is placed in service.
B. Taxpayers shall have the option for immediate and full
expensing for qualified property and qualified improvement property
as follows:
1. For purposes of computing income tax for taxable years
beginning after Decembe r 31, 2021, the cost of expenditures for
business assets that are qualified property or qualified im provement
property covered under Section 168 of the Internal Revenue Code
shall be eligible for one hundred percent (100%) bonus depreciation
and may be deducted as an expense incurred by the taxpayer during
the taxable year during which the property is pl aced in service,
notwithstanding any changes to federal law related to amortization
of cost recovery beginning on or after January 1, 2023, and shall
permanently remain fully and immediately deductible as an expense in
the tax year in which the property is placed in service for purposes
of calculating the taxpayer's income; and
2. If a taxpayer elects imm ediate and full expensing of
qualified property or qualified improvement property, any
depreciation calculated and claimed pursuant to this section shall
in no event be a duplication of any depreciation or bonus
depreciation allowed or permitted on the fed eral income tax return
of the taxpayer. For income tax returns filed on or after January
1, 2023, federal taxable income shall be increased by the amount of
depreciation received under the Internal Reve nue Code for the
ENR. S. B. NO. 602 Page 3
qualified property or qualified impr ovement property for which the
election has been made to imm ediately and fully expense the asset on
the Oklahoma income tax return for the year in which t he property
was placed in service. A taxpayer filing a return for which federal
taxable income is not increased as provided for in this section
prior to October 1, 2023, shall file an amended return ref lecting
such increase not later than June 30, 2024. The Tax Commission
shall not assess penalties or interest with respect to the failure
to reflect such increase if a correct amended return is filed as
required herein; and
3. The taxpayer's decision to recover investment costs through
immediate expensing in the year the investment cost is incurred, or
amortized over an amortization schedule, is irrevocabl e unless
specifically allowed for by the Oklahoma Tax Commission.
C. 1. To conform to Section 179 of the Internal Revenue Code,
taxpayers shall be allowed to immediately deduct as an expense the
cost of certain depreciable business assets in the tax year in which
the property is placed in service.
2. For purposes of computing income tax fo r taxable years
beginning after December 31, 2021, taxpayers may elect to treat the
cost of any Section 179 of the Internal Revenue Code property as an
expense which is not chargeable to the capital account. Any cost so
treated shall be allowed as a deduc tion for the taxable year in
which the Section 179 Internal Revenue Code property is placed in
service.
D. The Oklahoma Tax Commission shall, within sixty (60) days of
the effective date of this act, promulgate rules for implementation
of this act which shall conform to the Internal Revenue Code of 1986
and must be consistent with the Internal Revenue Service's rules.
The provisions of this section shall supersede to t he extent of any
inconsistency with any administrative rule.
SECTION 2. This act shall become effective November 1, 2023.
ENR. S. B. NO. 602 Page 4
Passed the Senate the 18th day of May, 2023.
Presiding Officer of the Senate
Passed the House of Representatives the 25th day of April, 2023.
Presiding Officer of the House
of Representatives
OFFICE OF THE GOVERNOR
Received by the Office of the Governor this _______ _____________
day of _________________ __, 20_______, at _______ o'clock _______ M.
By: ______________________________ ___
Approved by the Governor of the State of Oklahoma this _____ ____
day of _________________ __, 20_______, at _______ o'clock _______ M.
_________________________________
Governor of the State of Oklahoma
OFFICE OF THE SECRETARY OF STATE
Received by the Office of the Secretary of State this _______ ___
day of __________________, 20 _______, at _______ o'clock _______ M.
By: _______________________________ __