OK
Oklahoma House Bill HB2285

Oklahoma 2024 Regular Session

Oklahoma House Bill HB2285 Compare Versions

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28-STATE OF OKLAHOMA
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30-1st Session of the 59th Le gislature (2023)
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32-HOUSE BILL 2285 By: Lepak
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38-AS INTRODUCED
39-
40-An Act relating to revenue and taxation; amending 68
41-O.S. 2021, Section 2355, as amended by Section 45,
42-Chapter 228, O.S.L. 2022 , (68 O.S. Supp. 2022,
43-Section 2355), which relates to income tax rates;
44-modifying income tax rate for individuals; providing
45-for certain determination related to total
46-collections for the General Revenue Fund of the State
47-Treasury; prescribing method for computations;
48-providing for reduction of individual inc ome tax
49-rates; imposing duties on State Board of
50-Equalization; imposing limit on reductions based on
51-revenue determinations; providing for individual
52-income tax rate after successive rate reductions;
53-amending 68 O.S. 2021, Section 2358, as amended by
54-Section 2, Chapter 341, O.S.L. 2022 (68 O.S. Supp.
55-2022, Section 2358), which re lates to computation of
56-Oklahoma adjusted gross income; modifying standard
57-deduction amounts; and providing an effective date .
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29+SENATE FLOOR VERSION
30+April 12, 2023
31+
32+
33+ENGROSSED HOUSE
34+BILL NO. 2285 By: Lepak and O'Donnell of the
35+House
36+
37+ and
38+
39+ Rader of the Senate
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45+
46+
47+
48+
49+[ revenue – taxation – income tax – collections –
50+General Revenue Fund – computations – income – State
51+Board of Equalization – determinations – reductions –
52+income – amounts – effective date ]
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6461 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
6562 SECTION 1. AMENDATORY 68 O.S. 2021, Section 2355, as
6663 amended by Section 45, Chapter 228, O.S.L. 2022 (68 O.S. Sup p. 2022,
6764 Section 2355), is amended to read as follows:
6865 Section 2355. A. Individuals. For all taxable years beginning
6966 after December 31, 1998, and before January 1, 2006, a tax is hereby
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9667 imposed upon the Oklahoma taxable income of every resident or
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9795 nonresident individual, which tax shall be computed at the option of
9896 the taxpayer under one of the two following methods:
9997 1. METHOD 1.
10098 a. Single individuals and married individuals filing
10199 separately not deducting federal income tax:
102100 (1) 1/2% tax on first $1,000.00 or part thereof,
103101 (2) 1% tax on next $1,500.00 or part thereof,
104102 (3) 2% tax on next $1,250.00 or part thereof,
105103 (4) 3% tax on next $1,150.00 or part thereof,
106104 (5) 4% tax on next $1,300.00 or part th ereof,
107105 (6) 5% tax on next $1,500.00 or part thereof,
108106 (7) 6% tax on next $2,300.00 or part thereof, and
109107 (8) (a) for taxable years beginning after December
110108 31, 1998, and before January 1, 2002, 6.75%
111109 tax on the remainder,
112110 (b) for taxable years beginning on o r after
113111 January 1, 2002, and before January 1, 2004,
114112 7% tax on the remainder, and
115113 (c) for taxable years beginni ng on or after
116114 January 1, 2004, 6.65% tax on the remainde r.
117115 b. Married individuals filing jointly and surviving
118116 spouse to the extent and in the m anner that a
119117 surviving spouse is permitted to file a joint return
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146118 under the provisions of the Internal Revenue Code and
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147146 heads of households as defined in the Internal Revenue
148147 Code not deducting federal income tax:
149148 (1) 1/2% tax on first $2,000.00 or part th ereof,
150149 (2) 1% tax on next $3,000.00 or part thereof,
151150 (3) 2% tax on next $2,500.00 or part thereof,
152151 (4) 3% tax on next $2,300.00 or part thereof,
153152 (5) 4% tax on next $2,400.00 or part thereof ,
154153 (6) 5% tax on next $2,800.00 or part thereof,
155154 (7) 6% tax on next $6,000.00 or part thereof, and
156155 (8) (a) for taxable years beginning after December
157156 31, 1998, and before January 1, 2002, 6.75%
158157 tax on the remainder,
159158 (b) for taxable years beginning on or aft er
160159 January 1, 2002, and before January 1, 2004,
161160 7% tax on the remainder, and
162161 (c) for taxable years beginning on or after
163162 January 1, 2004, 6.65% tax on the remainder.
164163 2. METHOD 2.
165164 a. Single individuals and married individuals filing
166165 separately deducting fe deral income tax:
167166 (1) 1/2% tax on first $1,000.00 or part thereof,
168167 (2) 1% tax on next $1,500.00 or part thereof,
169168 (3) 2% tax on next $1,250.00 or part thereof,
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196169 (4) 3% tax on next $1,150.00 or part thereof,
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197197 (5) 4% tax on next $1,200.00 or part thereof,
198198 (6) 5% tax on next $1,400.00 or part thereof,
199199 (7) 6% tax on next $1,500. 00 or part thereof,
200200 (8) 7% tax on next $1,500.00 or part thereof,
201201 (9) 8% tax on next $2,000.00 or part thereof,
202202 (10) 9% tax on next $3,500 .00 or part thereof, and
203203 (11) 10% tax on the remain der.
204204 b. Married individuals filing jointly and surviving
205205 spouse to the extent and in the manner that a
206206 surviving spouse is permitted to file a joint return
207207 under the provisions of the Internal Revenue Code and
208208 heads of households as defined in the Internal Revenue
209209 Code deducting federal income tax:
210210 (1) 1/2% tax on the first $2,000.00 or part thereof,
211211 (2) 1% tax on the next $3,000.00 or part thereof,
212212 (3) 2% tax on the next $2,500.00 or part thereof,
213213 (4) 3% tax on the next $1,400.00 or part thereof,
214214 (5) 4% tax on the next $1,500.00 or part thereof,
215215 (6) 5% tax on the next $1, 600.00 or part thereof,
216216 (7) 6% tax on the next $1,250.00 or part thereof,
217217 (8) 7% tax on the next $1,750.00 or part thereof,
218218 (9) 8% tax on the next $3,000.00 or part thereof,
219219 (10) 9% tax on the next $6,000.00 or part thereof, and
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246220 (11) 10% tax on the remaind er.
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247248 B. Individuals. For all taxable years beginning on or after
248249 January 1, 2008, and ending any tax year which begins after Decem ber
249250 31, 2015, for which the determination required pursuan t to Sections
250251 4 and 5 of this act is made by the State Board of Equ alization, a
251252 tax is hereby imposed upon the Oklahoma taxable income of every
252253 resident or nonresident individual, which tax shall be computed as
253254 follows:
254255 1. Single individuals and married i ndividuals filing
255256 separately:
256257 (a) 1/2% tax on first $1,000.00 or pa rt thereof,
257258 (b) 1% tax on next $1,500.00 or part thereof,
258259 (c) 2% tax on next $1,250.00 or part thereof,
259260 (d) 3% tax on next $1,150.00 or part thereof,
260261 (e) 4% tax on next $2,300.00 or part th ereof,
261262 (f) 5% tax on next $1,500.00 or part thereof,
262263 (g) 5.50% tax on the remainder for the 2008 tax year and
263264 any subsequent tax year unless the rate prescribed by
264265 subparagraph (h) of this paragraph is in effect, and
265266 (h) 5.25% tax on the remainder for the 2009 and subsequent
266267 tax years. The decrease in the top marginal
267268 individual income tax rate otherwise authorized by
268269 this subparagraph shall be contingent upon the
269270 determination required to be made by the State Board
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296298 of Equalization pursuant to Section 2355 .1A of this
297299 title.
298300 2. Married individuals filing jointly and survi ving spouse to
299301 the extent and in the manner that a surviving spouse is permitted to
300302 file a joint return under t he provisions of the Internal Revenue
301303 Code and heads of households as defined in the Internal Revenue
302304 Code:
303305 (a) 1/2% tax on first $2,000.00 or pa rt thereof,
304306 (b) 1% tax on next $3,000.00 or part thereof,
305307 (c) 2% tax on next $2,500.00 or part thereof,
306308 (d) 3% tax on next $2,300.00 or pa rt thereof,
307309 (e) 4% tax on next $2,400.00 or part th ereof,
308310 (f) 5% tax on next $2,800.00 or part thereof,
309311 (g) 5.50% tax on the remainder for the 2008 tax year and
310312 any subsequent tax year unless the rate prescribed by
311313 subparagraph (h) of this paragraph is in effect, and
312314 (h) 5.25% tax on the remainder for the 2009 and subsequent
313315 tax years. The decrease in the top marginal
314316 individual income tax rate otherwise authorized by
315317 this subparagraph shall be contingent upon the
316318 determination required to be made by the S tate Board
317319 of Equalization pursuant to Section 2355 .1A of this
318320 title.
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345348 C. Individuals. For Except as otherwise provided b y subsection
346349 D of this section, for all taxable years beginning on or after
347350 January 1, 2022, a tax is hereby imposed upon the Oklahom a taxable
348351 income of every resident or non resident individual, which tax shall
349352 be computed as follows:
350353 1. Single individuals and married individuals filing
351354 separately:
352355 (a) 0.25% tax on first $1,000.00 or part thereo f,
353356 (b) 0.75% tax on next $1,500.00 or part thereof,
354357 (c) 1.75% tax on next $1,250.00 or part thereof,
355358 (d) 2.75% tax on next $1,150.00 or part thereof,
356359 (e) 3.75% tax on next $2,300.00 or part thereof,
357360 (f) 4.75% tax on the remainder.
358361 2. Married individuals filing jointly and surviving spouse to
359362 the extent and in the manner that a surviving spouse is permitted to
360363 file a joint return under the provisions of the Internal Revenue
361364 Code and heads of households as defined in th e Internal Revenue
362365 Code:
363366 (a) 0.25% tax on first $2,000.00 or part thereof,
364367 (b) 0.75% tax on next $3,000.00 or part thereof,
365368 (c) 1.75% tax on next $2,500.00 or part thereof,
366369 (d) 2.75% tax on next $2,300.00 or part thereof,
367370 (e) 3.75% tax on next $2,400.00 or part thereof,
368371 (f) 4.75% tax on the remainder.
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395399 No deduction for federal income taxes paid shall be allowed to
396400 any taxpayer to arrive at taxable income.
397401 D. Individuals. Except as otherwise provided by subsection E
398402 of this section, for all taxable years beginning on or after January
399403 1, 2024, a tax is hereby imposed upon the Oklahoma taxable income of
400404 every resident or nonresident individual, which tax shall be
401405 computed as follows:
402406 1. Single individuals and married individuals filing separately
403407 at the rate of four and five-tenths percent (4.5%);
404408 2. Married individuals filing jointly an d surviving spouse to
405409 the extent and in the manne r that a surviving spouse is permitted to
406410 file a joint return under the provisions of the Internal Revenue
407411 Code and heads of households as defined in the Internal Revenue Code
408-at the rate of four and five-tenths percent (4.5%).
412+at the rate of four and five-tenths percent (4.5%);
409413 3. Notwithstanding the provisions of subsection E of this
410414 section, the rate of tax prescribed by this subsection shall never
411415 be less than two and seventy -five hundredths percent (2.75%).
412416 No deduction for federal income taxes paid shal l be allowed to
413417 any taxpayer to arrive at taxable i ncome.
414418 E. The State Board of Equalization, at its February meeting
415419 each year, shall make a determination regarding the possibility of a
416420 decrease in the income tax rate othe rwise prescribed by subsection D
417421 of this section. If the revenue conditions prescr ibed by this
418422 subsection are met, which shall be included as part of the findings
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445450 of the State Board of Equalization, then the income tax rate
446451 otherwise prescribed by subsection D of this section shall be
447-reduced by twenty-five hundredths of one percent (0.002 5) effective
448-on January 1 of the calendar immediately following the year during
449-which the State Board of Equalization makes the finding that revenue
450-growth as prescribed by this subsection is sufficient to red uce the
451-income tax rate otherwise prescribed by subsection D of this
452-section. For purposes of this subsection, the total collections
453-from all revenue sources with respect to the General Revenue F und of
454-the State Treasury for the fiscal year ending Jun e 30, 2021, based
455-upon the certification made by the State Board of Equalization at
456-its December 2021, meeting shall be the initial base year amount.
457-Beginning with the February 2024 meeting of the State Board of
458-Equalization and at each succeeding February meeting, the State
459-Board shall compare the General Revenue Fund total collections
452+reduced by twenty-five hundredths of one percent (0. 0025%) effective
453+on January 1 of the calendar year immediately following the year
454+during which the State Board of Equalization makes the finding that
455+revenue growth as prescribed by this subsection is sufficient to
456+reduce the income tax rate otherwise prescribed by subsection D of
457+this section. For purposes of this subsection, the total
458+collections from all revenue sources with respect to the General
459+Revenue Fund of the State Treasur y for the fiscal year ending June
460+30, 2021, based upon the certification made by the State Board of
461+Equalization at its December 2021 meeting shall be the initial base
462+year amount. Beginning with the February 2024 meeting of the State
463+Board of Equalization and at each succeeding February meeting, the
464+State Board shall compare the General Revenue Fund total collections
460465 amount for each fiscal year ending on the immediately preceding June
461466 30 date, to the initial base year General Revenue Fund total
462467 collections amount. If there is an increase in the General Revenue
463468 Fund total collections amount equal to or greater than one and five-
464469 tenths percent (1.5%) compared to the initial base year General
465470 Revenue Fund total collections amount, the income tax rate otherwise
466471 prescribed by subsection D of this section shall be reduced
467472 effective January 1 of the immediately succeeding calendar year. If
468473 there is not an increase of at least one and five-tenths percent
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495501 (1.5%) in the General Revenue Fund total collections amoun t as
496502 reflected in the February certification of total collections
497503 compared to the initial base year General Revenue Fund total
498504 collection amount, there shall be no modification of the income tax
499505 rate as prescribed by this section. For any year during which the
500506 General Revenue Fund total collection amount as determined at the
501507 February meeting equals or exceeds the base year General Revenue
502508 Fund total collection amount by one and five-tenths percent (1.5%)
503509 or more, the base year shall be adjusted for purposes of any
504510 succeeding comparison. The State Board of Equalization shall make
505511 computations as required by this subsection and shall use the prior
506512 base year amount which shall be multiplied by one and five-tenths
507513 percent (1.5%) and the result of that computa tion shall be added to
508514 the base year General Revenue Fund total collection figure for
509515 purposes of any succeeding comparison as prescribed by this
510516 subsection. After an adjustment is made to any base year amount, a
511517 reduction in the income tax rate otherwise prescribed pursuant to
512518 subsection D of this section, in increments of twenty-five
513-hundredths of one percent (0.0025) may only occur if there is an
519+hundredths of one percent (0.0025%) may only occur if there is an
514520 increase of one and five-tenths percent (1.5%) or more in the
515521 adjusted base year General Revenue Fund total collection amount. If
516522 there are seven authorized reductions in the income tax ra te
517-otherwise prescribed by s ubsection D of this section, the eighth
523+otherwise prescribed by s ubsection D of this section, the seventh
518524 reduction in the income tax rate shall cause the income tax rate to
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545552 be two and seventy-five hundredths perc ent (2.75%) for the
546553 applicable income tax year, and there shall be no further reductions
547554 in the income tax rates which shall remain at two and seventy -five
548555 hundredths percent (2.75%). For purposes of implementing the
549556 reduction in income tax rates as set out in this subsection, the
550557 existing rates of tax shall be conv erted as they appear in
551558 subsection D of this section from a combined whole number and
552559 fraction into a decimal equivalent and for each reduction
553560 authorized, the amount subtracted from such converted numeral shall
554561 be an increment of 0.0025.
555562 F. Nonresident aliens. In lieu of the rates set forth in
556563 subsection A, B, C, or D above, there shall be imp osed on
557564 nonresident aliens, as defined in the Internal Revenue Code, a tax
558565 of eight percent (8%) instead of thirty percent (30%) as used in the
559566 Internal Revenue Code, with respect to the Oklahoma taxable income
560567 of such nonresident aliens as determined unde r the provision of the
561568 Oklahoma Income Tax Act.
562569 G. Every payer of amounts covered by this subsection shall
563570 deduct and withhold f rom such amounts paid each payee an amount
564571 equal to eight percent (8%) thereof . Every payer required to deduct
565572 and withhold taxes under this subsection shall for each quarterly
566573 period on or before the last day of the month following the close of
567574 each such quarterly period, pay over the amount so withheld as taxes
568575 to the Tax Commission, and shall file a return with each such
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595603 payment. Such return shall be in such form as the Tax Commission
596604 shall prescribe. Every payer required under this subsection to
597605 deduct and withhold a tax from a payee shall, as to the t otal
598606 amounts paid to each payee during the calendar year, furnish to such
599607 payee, on or before January 31, of the succeeding year, a written
600608 statement showing the name of the payer, the name of the payee and
601609 the payee's Social Security account number, if an y, the total amount
602610 paid subject to taxation, and the total amount deducte d and withheld
603611 as tax and such other information as the Tax Commission may require.
604612 Any payer who fails to withhold or pay to th e Tax Commission any
605613 sums herein required to be withh eld or paid shall be perso nally and
606614 individually liable therefor to the St ate of Oklahoma.
607615 E. H. Corporations. For all taxable years beginning after
608616 December 31, 2021, a tax is hereby imposed upon the Oklahoma taxable
609617 income of every corporation doing bu siness within this state or
610618 deriving income from sources within this state in an amount equal to
611619 four percent (4%) thereof.
612620 There shall be no additional Oklahoma income tax imposed on
613621 accumulated taxable income or on undistributed personal holding
614622 company income as those terms are defined in the Internal Revenue
615623 Code.
616624 F. I. Certain foreign corporations. In lieu of the tax imposed
617625 in the first paragraph of subsection D F of this section, for all
618626 taxable years beginning after December 31, 2021, there shall be
619627
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645654 imposed on foreign corporations, as defined in the Internal Revenue
646655 Code, a tax of four percent (4%) instead of thirty percent (30%) as
647656 used in the Internal Revenue Code, where such income is received
648657 from sources within Oklahoma, in accordanc e with the provisions of
649658 the Internal Revenue Code and t he Oklahoma Income Tax Act.
650659 Every payer of amounts covered by this subsection shall deduct
651660 and withhold from such amounts paid each payee an amount equal to
652661 four percent (4%) thereof. Every payer required to deduct and
653662 withhold taxes under this subsection shall for eac h quarterly period
654663 on or before the last day of the month following the close of each
655664 such quarterly period, pay over the amount so withheld as taxes to
656665 the Tax Commission, and shall file a return with each such payment .
657666 Such return shall be in such form as the Tax Commission shall
658667 prescribe. Every payer required under this subsection to deduct and
659668 withhold a tax from a payee shall, as to the total amounts paid to
660669 each payee during the calendar year, furnish to such payee, o n or
661670 before January 31, of the succeeding year, a written statement
662671 showing the name of the payer, the name of the payee and the payee's
663672 Social Security account number, if any, the total amounts paid
664673 subject to taxation, the total amount deducted and withh eld as tax
665674 and such other infor mation as the Tax Commission may require. Any
666675 payer who fails to withhold or pay to the Tax Commission any sums
667676 herein required to be withheld or paid shall be personal ly and
668677 individually liable therefor to the State of Okla homa.
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695705 G. J. Fiduciaries. A tax is hereby imposed upon the Oklahoma
696706 taxable income of every trust and estate at the same rates as are
697707 provided in subsection B or, C or D of this section for single
698708 individuals. Fiduciaries are not allowed a deduction for any
699709 federal income tax paid.
700710 H. K. Tax rate tables. For all taxable years beginning after
701711 December 31, 1991, in lieu of the tax imposed by subsection A, B or,
702712 C or D of this section, as applicable there is hereby imp osed for
703713 each taxable year on the taxable income of ever y individual, whose
704714 taxable income for such taxable year does not exceed the ceiling
705715 amount, a tax determined under tables, applicable to such taxable
706716 year which shall be prescribed by the Tax Commiss ion and which shall
707717 be in such form as it determines app ropriate. In the table so
708718 prescribed, the amounts of the tax shall be computed on the basis of
709719 the rates prescribed by subsection A, B or, C or D of this section.
710720 For purposes of this subsection, the term "ceiling amount" means,
711721 with respect to any taxpayer, t he amount determined by the Tax
712722 Commission for the tax rate category in which such taxpayer falls.
713723 SECTION 2. AMENDATORY 68 O.S. 2021, Section 2358, as
714724 amended by Section 2, Cha pter 341, O.S.L. 2022 (68 O.S. Supp. 2022,
715725 Section 2358), is amended to re ad as follows:
716726 Section 2358. For all tax years beginning after December 31,
717727 1981, taxable income and a djusted gross income shall be adjusted to
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744755 arrive at Oklahoma taxable income and Oklahoma adjusted gross income
745756 as required by this section.
746757 A. The taxable income of any taxpayer shall be adjusted to
747758 arrive at Oklahoma taxable income for corporations and O klahoma
748759 adjusted gross income for individuals, as foll ows:
749760 1. There shall be added interest income on obligations of any
750761 state or political subdivision thereto which is not otherwise
751762 exempted pursuant to other laws of this state, to the extent that
752763 such interest is not included in taxable income and adjusted gross
753764 income.
754765 2. There shall be deducted amounts included in suc h income that
755766 the state is prohibited from taxing because of the provisions of the
756767 Federal Constitution, the State Constitution, federal laws or laws
757768 of Oklahoma.
758769 3. The amount of any feder al net operating loss dedu ction shall
759770 be adjusted as follows:
760771 a. For carryovers and carrybacks to taxable years
761772 beginning before January 1, 1981, the amount of any
762773 net operating loss deduction allowed t o a taxpayer for
763774 federal income tax purposes shall be reduced to an
764775 amount which is the same portion thereof as the lo ss
765776 from sources within this state, as determined pursuant
766777 to this section and Section 2362 of this title, for
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793805 the taxable year in which su ch loss is sustained is of
794806 the total loss for such yea r;
795807 b. For carryovers and c arrybacks to taxable years
796808 beginning after December 31, 1980, the amount of any
797809 net operating loss deduction allowed for the taxable
798810 year shall be an amount equal to the aggreg ate of the
799811 Oklahoma net operating loss carryovers and carrybacks
800812 to such year. Oklahoma net operating losses shall b e
801813 separately determined by reference to Section 172 of
802814 the Internal Revenue Code, 26 U.S.C., Section 172, as
803815 modified by the Oklahoma Incom e Tax Act, Section 2351
804816 et seq. of this title, and sha ll be allowed without
805817 regard to the existence of a federal net operating
806818 loss. For tax years beginning after December 31,
807819 2000, and ending before January 1, 2008, the years to
808820 which such losses may be carried shall be determined
809821 solely by reference to Sec tion 172 of the Internal
810822 Revenue Code, 26 U.S.C., Section 172, with the
811823 exception that the terms "net operating loss" and
812824 "taxable income" shall be replaced with "Oklahoma net
813825 operating loss" and "Oklahoma taxable income". For
814826 tax years beginning after De cember 31, 2007, and
815827 ending before January 1, 2009, years to wh ich such
816828 losses may be carried back shall be limited to two (2)
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843856 years. For tax years beginning after December 31,
844857 2008, the years to which such losses may be carried
845858 back shall be determined s olely by reference to
846859 Section 172 of the Internal Revenue Code, 26 U.S.C.,
847860 Section 172, with the exception that the terms "net
848861 operating loss" and "taxable income" shall be replaced
849862 with "Oklahoma net operating loss" and "Oklahoma
850863 taxable income".
851864 4. Items of the following nature shall be allocated as
852865 indicated. Allowable deductions attributable to items separately
853866 allocable in subparagraphs a, b and c of this paragraph, whether or
854867 not such items of in come were actually received, shall be allocated
855868 on the same basis as those items :
856869 a. Income from real and tangible personal property, such
857870 as rents, oil and mining production or royalties, and
858871 gains or losses from sales of such property, shall be
859872 allocated in accordance with the situs of such
860873 property;
861874 b. Income from intangible person al property, such as
862875 interest, dividends, patent or copyright royalties,
863876 and gains or losses from sales of such property, shall
864877 be allocated in accordance with the domiciliary situs
865878 of the taxpayer, except that:
866879
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892906 (1) where such property has acquired a nonun itary
893907 business or commercial situ s apart from the
894908 domicile of the taxpayer such income shall be
895909 allocated in accordance with such business or
896910 commercial situs; interest income from
897911 investments held to generate working capital for
898912 a unitary business enterpr ise shall be included
899913 in apportionable income; a resident trust or
900914 resident estate shall be treated as having a
901915 separate commercial or business situs insofar as
902916 undistributed income is concerned, but shall not
903917 be treated as having a separate commercial or
904918 business situs insofar as distrib uted income is
905919 concerned,
906920 (2) for taxable years beginning after December 31,
907921 2003, capital or ordinary gains or losses from
908922 the sale of an ownership interest in a publicly
909923 traded partnership, as de fined by Section 7704(b)
910924 of the Internal Revenue Code, sha ll be allocated
911925 to this state in the ratio of the original cost
912926 of such partnership's tangible property in this
913927 state to the original cost of su ch partnership's
914928 tangible property everywhere, as dete rmined at
915929 the time of the sale; if more than fifty percent
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942957 (50%) of the value of the partnership's assets
943958 consists of intangible assets, capital or
944959 ordinary gains or losses from the sale of an
945960 ownership interest in the partnership shall be
946961 allocated to this state in accordance with the
947962 sales factor of the partner ship for its first
948963 full tax period immediately preceding its tax
949964 period during which the ownership interest in the
950965 partnership was sold; the pro visions of this
951966 division shall only apply if the capit al or
952967 ordinary gains or lo sses from the sale of an
953968 ownership interest in a partnership do not
954969 constitute qualifying gain receiving capital
955970 treatment as defined in subparagraph a of
956971 paragraph 2 of subsec tion F of this section,
957972 (3) income from such property which is required to be
958973 allocated pursuant to the provisi ons of paragraph
959974 5 of this subsection shall be allocated as herein
960975 provided;
961976 c. Net income or loss from a business activity which is
962977 not a part of business carried on within or without
963978 the state of a unitary character shall b e separately
964979 allocated to the state in which such activity is
965980 conducted;
966981
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9921008 d. In the case of a manufacturing or processing
9931009 enterprise the business of which in Oklahoma consists
9941010 solely of marketing its products by:
9951011 (1) sales having a situs without this state, shipped
9961012 directly to a point from without the state to a
9971013 purchaser within the state, commonly known as
9981014 interstate sales,
9991015 (2) sales of the product stored in public warehouses
10001016 within the state pursuant to "in transit"
10011017 tariffs, as prescribed and allowed by th e
10021018 Interstate Commerce Commi ssion, to a purchaser
10031019 within the state,
10041020 (3) sales of the product stored in public warehouses
10051021 within the state where the shipment to such
10061022 warehouses is not covered by "in transit"
10071023 tariffs, as prescribed a nd allowed by the
10081024 Interstate Commerce Commission, to a purchaser
10091025 within or without the state,
10101026 the Oklahoma net income shall, at the option of the
10111027 taxpayer, be that portion of the total net income of
10121028 the taxpayer for federal income tax purposes derived
10131029 from the manufacture and/or pr ocessing and sales
10141030 everywhere as determined by the ratio of the sales
10151031 defined in this section made to the purchaser within
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10421059 the state to the total sales everywhere. The term
10431060 "public warehouse" as used in this subparagraph means
10441061 a licensed public warehouse, the principal business of
10451062 which is warehousing merchandise for the public;
10461063 e. In the case of insurance companies, Oklahoma taxable
10471064 income shall be taxable income of the taxpay er for
10481065 federal tax purposes, as adjusted for the adjus tments
10491066 provided pursuant to the provisions of paragraphs 1
10501067 and 2 of this subsection, apportioned as follows:
10511068 (1) except as otherwise provided by division (2) of
10521069 this subparagraph, taxable income of an i nsurance
10531070 company for a taxable year shall be apportion ed
10541071 to this state by multip lying such income by a
10551072 fraction, the numerator of which is the direct
10561073 premiums written for insurance on property or
10571074 risks in this state, and the denominator of which
10581075 is the direct premiums written for insurance on
10591076 property or risks everywhere. For purposes of
10601077 this subsection, the term "direct premiums
10611078 written" means the total amount of direct
10621079 premiums written, assessments and annuity
10631080 considerations as reported for the taxable y ear
10641081 on the annual statement filed by the company with
10651082 the Insurance Commissioner in the form approved
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10921110 by the National Association of Insurance
10931111 Commissioners, or such other form as may be
10941112 prescribed in lieu thereof,
10951113 (2) if the principal source of premiums w ritten by an
10961114 insurance company consists of premiums fo r
10971115 reinsurance accepted by it, the taxable income of
10981116 such company shall be apportioned to this state
10991117 by multiplying such income by a fraction, the
11001118 numerator of which is the sum of (a) direct
11011119 premiums written for insurance on property or
11021120 risks in this state, plus (b) premiums written
11031121 for reinsurance accepted in respect of property
11041122 or risks in this state, and the denominator of
11051123 which is the sum of (c) direct premiums written
11061124 for insurance on property or ris ks everywhere,
11071125 plus (d) premiums written for reinsuran ce
11081126 accepted in respect of property or risks
11091127 everywhere. For purposes of this paragraph,
11101128 premiums written for reinsurance accepted in
11111129 respect of property or risks in this state,
11121130 whether or not otherwise determinable, may at the
11131131 election of the company be d etermined on the
11141132 basis of the proportion which premiums written
11151133 for insurance accepted from companies
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11421161 commercially domiciled in Oklahoma bears to
11431162 premiums written for reinsurance accepted from
11441163 all sources, or alternatively in the proportion
11451164 which the sum of the direct premiums writ ten for
11461165 insurance on property or risks in this state by
11471166 each ceding company from which reinsurance is
11481167 accepted bears to the sum of the total direct
11491168 premiums written by each suc h ceding company for
11501169 the taxable year.
11511170 5. The net income or loss remaining afte r the separate
11521171 allocation in paragraph 4 of this subsection, being that which is
11531172 derived from a unitary business enterprise, shall be apportioned to
11541173 this state on the basis of the arithmetical average of three factors
11551174 consisting of property, payroll and sa les or gross revenue
11561175 enumerated as subparagraphs a, b and c of this paragraph. Net
11571176 income or loss as used in this paragraph includes that derived from
11581177 patent or copyright roya lties, purchase discounts, and interest on
11591178 accounts receivable relating to or ar ising from a business activity,
11601179 the income from which is apportioned pursuant to this subsection,
11611180 including the sale or other disposition of such property and any
11621181 other property used in the unitary enterprise. Deductions used in
11631182 computing such net income or loss shall not include taxes based on
11641183 or measured by income. Provided, for corporations whose property
11651184 for purposes of the tax imposed by Section 2355 of this title has an
11661185
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11921212 initial investment cost equaling or exceeding Two Hund red Million
11931213 Dollars ($200,000,000.00) and such investment is made on or after
11941214 July 1, 1997, or for corporations which expand their property or
11951215 facilities in this state and such expansion has an investme nt cost
11961216 equaling or exceeding Two Hundred Million Doll ars ($200,000,000.00)
11971217 over a period not to exceed three (3) years, and such expansion is
11981218 commenced on or after January 1, 2000, the three factors shall be
11991219 apportioned with property and payroll, each com prising twenty-five
12001220 percent (25%) of the apportionment factor and sales comprisi ng fifty
12011221 percent (50%) of the apportionment factor. The apportionment
12021222 factors shall be computed as follows:
12031223 a. The property factor is a fraction, the numerator of
12041224 which is the average value of the taxpayer's real and
12051225 tangible personal property owned or re nted and used in
12061226 this state during the tax period and the denominator
12071227 of which is the average value of all the taxpayer's
12081228 real and tangible personal property everywhere owned
12091229 or rented and used during the tax period.
12101230 (1) Property, the income from which is separately
12111231 allocated in paragraph 4 of this subsection,
12121232 shall not be included in determining this
12131233 fraction. The numerator of the fraction shall
12141234 include a portion of the invest ment in
12151235 transportation and other equipment having no
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12421263 fixed situs, such as rollin g stock, buses, trucks
12431264 and trailers, including machinery and equipment
12441265 carried thereon, airplanes, salespersons'
12451266 automobiles and other similar equipment, in the
12461267 proportion that miles traveled in Oklahoma by
12471268 such equipment bears to total miles traveled,
12481269 (2) Property owned by the taxpayer is valued at its
12491270 original cost. Property rented by the taxpayer
12501271 is valued at eight times the net annual rental
12511272 rate. Net annual rental rate is the annual
12521273 rental rate paid by the taxpayer, less any annual
12531274 rental rate received by the taxpayer from
12541275 subrentals,
12551276 (3) The average value of property shall be determined
12561277 by averaging the values at the beginning and
12571278 ending of the tax period but the Oklahoma Tax
12581279 Commission may require the averaging of monthly
12591280 values during the tax perio d if reasonably
12601281 required to reflect properly the average value of
12611282 the taxpayer's property;
12621283 b. The payroll factor is a fraction, the numerator of
12631284 which is the total compensation for services rendered
12641285 in the state during the tax per iod, and the
12651286 denominator of which is the total compensation for
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12921314 services rendered everywhere during the tax period.
12931315 "Compensation", as used in this subsection means those
12941316 paid-for services to the exten t related to the unitary
12951317 business but does not include officers' salaries,
12961318 wages and other compensation.
12971319 (1) In the case of a transportation enterprise, the
12981320 numerator of the fraction shall include a portion
12991321 of such expenditure in connection with employees
13001322 operating equipment over a fixed route, such as
13011323 railroad employees, airline pilo ts, or bus
13021324 drivers, in this state only a part of the time,
13031325 in the proportion that mileage traveled in
13041326 Oklahoma bears to total mileage traveled by such
13051327 employees,
13061328 (2) In any case the numerator of the fraction shall
13071329 include a portion of such expenditures in
13081330 connection with itinerant employees, such as
13091331 traveling salespersons, in this state only a part
13101332 of the time, in the proportion that time spent in
13111333 Oklahoma bears to total time sp ent in furtherance
13121334 of the enterprise by such employees ;
13131335 c. The sales factor is a fraction, the numerator of which
13141336 is the total sales or gross revenue of the taxpayer in
13151337 this state during the tax period, and the denominator
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13421365 of which is the total sales or gr oss revenue of the
13431366 taxpayer everywhere during the tax period. "Sales",
13441367 as used in this subsection does not include sales or
13451368 gross revenue which are separately allocated in
13461369 paragraph 4 of this subsection.
13471370 (1) Sales of tangible personal property have a situ s
13481371 in this state if the property is delivered or
13491372 shipped to a purchaser other tha n the United
13501373 States government, within this state regardless
13511374 of the FOB point or other conditions of the sale;
13521375 or the property is shipped from an office, store,
13531376 warehouse, factory or other place of storage in
13541377 this state and (a) th e purchaser is the United
13551378 States government or (b) the taxpayer is not
13561379 doing business in the state of the destination of
13571380 the shipment.
13581381 (2) In the case of a railroad or interurban railway
13591382 enterprise, the numerator of the fraction shall
13601383 not be less than the allocation of revenues to
13611384 this state as shown in its annual report to the
13621385 Corporation Commission.
13631386 (3) In the case of an airline, truck or bus
13641387 enterprise or freight car, tank car, refrigerator
13651388 car or other railroad equipment enterprise, the
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13921416 numerator of the fraction shall include a portion
13931417 of revenue from interstate transportation in the
13941418 proportion that interstate mileage traveled in
13951419 Oklahoma bears to total interstate mileage
13961420 traveled.
13971421 (4) In the case of an oil, gasoline or gas pipeline
13981422 enterprise, the numer ator of the fraction shall
13991423 be either the total of traffic units of the
14001424 enterprise within Oklahoma or the revenue
14011425 allocated to Oklahoma based upon miles moved, at
14021426 the option of the taxpayer, and the deno minator
14031427 of which shall be the total of traffic units o f
14041428 the enterprise or the re venue of the enterprise
14051429 everywhere as appropriate to the numerator. A
14061430 "traffic unit" is hereby defined as the
14071431 transportation for a distance of one (1) mile of
14081432 one (1) barrel of oil, one (1) gallon of gasoline
14091433 or one thousand (1,0 00) cubic feet of natural or
14101434 casinghead gas, as the case may be.
14111435 (5) In the case of a telephone or telegraph or other
14121436 communication enterprise, the numerator of the
14131437 fraction shall include that portion o f the
14141438 interstate revenue as is allocated pursuant to
14151439 the accounting procedures p rescribed by the
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14421467 Federal Communications Com mission; provided that
14431468 in respect to each corporation or business entity
14441469 required by the Federal Communications Commission
14451470 to keep its books and records in accordance with
14461471 a uniform system of accounts prescribed b y such
14471472 Commission, the intrastate net incom e shall be
14481473 determined separately in the manner provided by
14491474 such uniform system of accounts and only the
14501475 interstate income shall be su bject to allocation
14511476 pursuant to the provisions of this subsection.
14521477 Provided further, that the gross revenue factors
14531478 shall be those as are determined pursuant to the
14541479 accounting procedures prescribed by the Federal
14551480 Communications Commission.
14561481 In any case where the apportionment of the three factors
14571482 prescribed in this paragraph attribute s to Oklahoma a portion of net
14581483 income of the enterprise out of all appropriate proportion to the
14591484 property owned and/or business transacted within this state, because
14601485 of the fact that one or more of the factors so prescribed are no t
14611486 employed to any apprecia ble extent in furtherance of the enterprise ;
14621487 or because one or more factors not so prescribed are employed to a
14631488 considerable extent in furtherance of the enterprise; or because of
14641489 other reasons, the Tax Commission is empowered to permit, after a
14651490 showing by taxpayer that an excessive portion of net income has been
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14921518 attributed to Oklahoma, or require, when in its judgment an
14931519 insufficient portion of net income has been attributed to Oklahoma,
14941520 the elimination, substitution, or use of ad ditional factors, or
14951521 reduction or increase in the weight of such pres cribed factors.
14961522 Provided, however, that any such variance from such prescribed
14971523 factors which has the effect of increasing the portio n of net income
14981524 attributable to Oklahoma must not be i nherently arbitrary, and
14991525 application of the recomputed final apportio nment to the net income
15001526 of the enterprise must attribute to Oklahoma only a reasonable
15011527 portion thereof.
15021528 6. For calendar years 1997 a nd 1998, the owner of a new or
15031529 expanded agricultural c ommodity processing facili ty in this state
15041530 may exclude from Oklahoma taxable income, or in the case of an
15051531 individual, the Oklahoma adjusted gross income, fifteen percent
15061532 (15%) of the investment by the o wner in the new or expanded
15071533 agricultural commodity pro cessing facility. For calendar year 1999,
15081534 and all subsequent years, the percentage, not to exceed fifteen
15091535 percent (15%), available to the owner of a new or expanded
15101536 agricultural commodity processing fa cility in this state claiming
15111537 the exemption shall be a djusted annually so that t he total estimated
15121538 reduction in tax liabili ty does not exceed One Million Dollars
15131539 ($1,000,000.00) annually. The Tax Commission shall promulgate rules
15141540 for determining the perce ntage of the investment which each eligible
15151541 taxpayer may exclude. The exclusion provided by this paragraph
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15421569 shall be taken in the taxable year when the investment is made. In
15431570 the event the total reduction in tax liability authorized by this
15441571 paragraph exceeds One Million Dollars ($1,000,000.00) in any
15451572 calendar year, the Tax Commission shall permit any excess over One
15461573 Million Dollars ($1,000,000.00) and shall factor such excess into
15471574 the percentage for subsequent years. Any amount of the exemption
15481575 permitted to be excluded pursuant to the provisions of this
15491576 paragraph but not used in any year may be carried forward as an
15501577 exemption from income pursuant to the provisions of this paragraph
15511578 for a period not exceeding six (6) years following the year in which
15521579 the investment was originally made.
15531580 For purposes of this par agraph:
15541581 a. "Agricultural commodity processing facility" means
15551582 building, structures, fixtures and improvements used
15561583 or operated primarily for the processing or production
15571584 of marketable products from agri cultural commodities.
15581585 The term shall also mean a dair y operation that
15591586 requires a depreciable investment of at least Two
15601587 Hundred Fifty Thousand Dollars ($250,000.00) and which
15611588 produces milk from dairy cows. The term does not
15621589 include a facility that provid es only, and nothing
15631590 more than, storage, cleaning, dry ing or transportation
15641591 of agricultural commodities, and
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15911619 b. "Facility" means each part of the facility which is
15921620 used in a process primarily for:
15931621 (1) the processing of agricultural commodities,
15941622 including receiving or storing agricultural
15951623 commodities, or the p roduction of milk at a dai ry
15961624 operation,
15971625 (2) transporting the agricult ural commodities or
15981626 product before, during or after the processing,
15991627 or
16001628 (3) packaging or otherwise preparing the product for
16011629 sale or shipment.
16021630 7. Despite any provision to the contrary in paragraph 3 of this
16031631 subsection, for taxable years beginning after Dec ember 31, 1999, in
16041632 the case of a taxpayer which has a farming loss, such farming loss
16051633 shall be considered a net operating loss carryb ack in accordance
16061634 with and to the extent of the Intern al Revenue Code, 26 U.S.C .,
16071635 Section 172(b)(G). However, the amount o f the net operating loss
16081636 carryback shall not exceed the lesser of:
16091637 a. Sixty Thousand Dollars ($60,000.00), or
16101638 b. the loss properly sh own on Schedule F of the Internal
16111639 Revenue Service Form 1040 reduced by one-half (1/2) of
16121640 the income from all other sources other than reflected
16131641 on Schedule F.
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16401669 8. In taxable years beginning after December 31, 1995, all
16411670 qualified wages equal to the federal income tax credit set forth in
16421671 26 U.S.C.A., Section 45 A, shall be deducted f rom taxable income.
16431672 The deduction allowed purs uant to this paragraph shall only be
16441673 permitted for the tax years in which the federal tax credit pursuant
16451674 to 26 U.S.C.A., Section 45A , is allowed. For purposes of this
16461675 paragraph, "qualified wages" means those wages used to calculate the
16471676 federal credit pursuant to 26 U.S.C.A., Section 45A.
16481677 9. In taxable years beginning after December 31, 2005, an
16491678 employer that is eligible for and utili zes the Safety Pays OSHA
16501679 Consultation Service provided by the Oklahoma Depa rtment of Labor
16511680 shall receive an exemption from taxable income in the amount of One
16521681 Thousand Dollars ($1,000.00) for the tax year that the service is
16531682 utilized.
16541683 10. For taxable years beginning on or after January 1, 2010,
16551684 there shall be added to Oklahoma taxable income an amount equal to
16561685 the amount of deferred income not included in such taxable income
16571686 pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986
16581687 as amended by Section 1231 of the American Recovery and Reinvestment
16591688 Act of 2009 (P.L. No . 111-5). There shall be subtracted from
16601689 Oklahoma taxable income an amount equal to the amount of deferred
16611690 income included in such taxable income pursuant to Section 108(i)(1)
16621691 of the Internal Revenue Code by Section 1231 of the America n
16631692 Recovery and Reinvestment Act of 2009 (P.L. No. 111-5).
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16901720 11. For taxable years beginning on or after January 1, 2019,
16911721 there shall be subtracted from Oklahoma taxable income or adjusted
16921722 gross income any item of income or gain, and there shall be added to
16931723 Oklahoma taxable income or adjusted gross income any item of loss or
16941724 deduction that in the absence of an election pursuant to the
16951725 provisions of the Pass-Through Entity Tax Equity Act of 2019 would
16961726 be allocated to a member or to an indirect member of an ele cting
16971727 pass-through entity pursuant to Section 2351 et seq. of this ti tle,
16981728 if (i) the electing pass-through entity has accounted for such item
16991729 in computing its Oklahoma net entity income or loss pursuant to the
17001730 provisions of the Pass-Through Entity Tax Equi ty Act of 2019, and
17011731 (ii) the total amount of tax attributable to any resulting Oklahoma
17021732 net entity income has been paid. The Oklahoma Tax Commission shall
17031733 promulgate rules for the reporting of such exc lusion to direct and
17041734 indirect members of the electing pass-through entity. As used in
17051735 this paragraph, "electing pass-through entity", "indirect member",
17061736 and "member" shall be defined in the same manner as prescribed by
17071737 Section 2355.1P-2 of this title. Notwithstanding the application of
17081738 this paragraph, the a djusted tax basis of any ownership interest in
17091739 a pass-through entity for purposes of Section 2351 et seq. of this
17101740 title shall be equal to its adjusted tax basis for federal income
17111741 tax purposes.
17121742 B. 1. The taxable income of any corporation shall be further
17131743 adjusted to arrive at Oklahoma taxable income, except those
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17401771 corporations electing treatment as provided in subchapter S of the
17411772 Internal Revenue Code, 26 U.S.C., Section 1361 et seq., and Section
17421773 2365 of this title, deductions pursuant to the provisions of the
17431774 Accelerated Cost Recovery System as defined and allowed in the
17441775 Economic Recovery Tax Act of 1981, Public Law 97-34, 26 U.S.C.,
17451776 Section 168, for depreciation of assets placed into service after
17461777 December 31, 1981, shall not be allowed in calculating Okl ahoma
17471778 taxable income. Such corporations shall be allowed a deduction for
17481779 depreciation of assets placed into service after December 31, 1981,
17491780 in accordance with provisions of the Internal Revenue Code, 26
17501781 U.S.C., Section 1 et seq., in effect immediately pr ior to the
17511782 enactment of the Accelerated Cost Recovery System . The Oklahoma tax
17521783 basis for all such assets placed into service after December 31,
17531784 1981, calculated in this section shall be retained and ut ilized for
17541785 all Oklahoma income tax purposes through th e final disposition of
17551786 such assets.
17561787 Notwithstanding any other provisi ons of the Oklahoma Income Tax
17571788 Act, Section 2351 et seq. of this title, or of the Internal Revenue
17581789 Code to the contrary, this subsect ion shall control calculation of
17591790 depreciation of asset s placed into service after December 31, 1981,
17601791 and before January 1, 1983.
17611792 For assets placed in service and held by a corporation in which
17621793 accelerated cost recovery system was previously disallowed, an
17631794 adjustment to taxable income is required in the first taxable year
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17901822 beginning after December 31, 1982, to reconcile the basi s of such
17911823 assets to the basis allowed in the Internal Revenue Code. The
17921824 purpose of this adjustment is to equalize the basis and allo wance
17931825 for depreciation accounts between that reported to the Internal
17941826 Revenue Service and that reported to Oklahoma.
17951827 2. For tax years beginning on or after January 1, 2009, and
17961828 ending on or before December 31, 2009, there shall be added to
17971829 Oklahoma taxable income any amount in excess of One Hundred Seventy -
17981830 five Thousand Dollars ($175,000.00) which has been deducted as a
17991831 small business expense under Internal Revenue Code, Section 179 as
18001832 provided in the American Recovery and Reinvestment Act of 2009.
18011833 C. 1. For taxable years beginning after December 31, 1987, the
18021834 taxable income of any corporation shall be further adjusted to
18031835 arrive at Oklahoma taxable income for transfers of technology to
18041836 qualified small businesses located in Oklahoma. Such transferor
18051837 corporation shall be allowed an exemption from taxable inco me of an
18061838 amount equal to the amount of royalty payment received as a result
18071839 of such transfer; provided, however, such amount shall not exceed
18081840 ten percent (10%) of the amount of gross proceeds received b y such
18091841 transferor corporation as a result of the techn ology transfer. Such
18101842 exemption shall be allowed for a period not to exceed ten (10) years
18111843 from the date of receipt of the first royalty payment accruing from
18121844 such transfer. No exemption may be claimed for transfers of
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18391872 technology to qualified small busine sses made prior to January 1,
18401873 1988.
18411874 2. For purposes of this subsecti on:
18421875 a. "Qualified small business" means an entity, whether
18431876 organized as a corporation, partnership, or
18441877 proprietorship, organized for profit with its
18451878 principal place of business located wi thin this state
18461879 and which meets the following criteria:
18471880 (1) Capitalization of not more than Two Hundred Fifty
18481881 Thousand Dollars ($250,000.00),
18491882 (2) Having at least fifty percent (50%) of its
18501883 employees and assets located in Oklahoma at the
18511884 time of the transfer, and
18521885 (3) Not a subsidiary or affiliate of the transferor
18531886 corporation;
18541887 b. "Technology" means a proprietary process, formula,
18551888 pattern, device or compilation of scientific or
18561889 technical information which is not in the public
18571890 domain;
18581891 c. "Transferor corporatio n" means a corporation which is
18591892 the exclusive and undisputed owner of the technology
18601893 at the time the transfer is made; and
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18871921 d. "Gross proceeds" means the total amount of
18881922 consideration for the transfer of technology, whether
18891923 the consideration is in money or otherwise.
18901924 D. 1. For taxable years beginning after December 31, 200 5, the
18911925 taxable income of any corporation, estate or trust, shall be further
18921926 adjusted for qualifying gains receiving capital treatment . Such
18931927 corporations, estates or trusts shall be allow ed a deduction from
18941928 Oklahoma taxable income for the amount of qualify ing gains receiving
18951929 capital treatment earned by the corporation, estate or trust during
18961930 the taxable year and included in the federal taxable income of such
18971931 corporation, estate or trust.
18981932 2. As used in this subsection:
18991933 a. "qualifying gains receiving capita l treatment" means
19001934 the amount of net capital gains, as defined in Section
19011935 1222(11) of the Internal Revenue Code, included in the
19021936 federal income tax return of the corporation, estate
19031937 or trust that result from:
19041938 (1) the sale of real property or tangible pers onal
19051939 property located within Oklahoma that has been
19061940 directly or indirectly owned by the corporation,
19071941 estate or trust for a holding peri od of at least
19081942 five (5) years prior to the date of the
19091943 transaction from which such net capital gains
19101944 arise,
19111945
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19371972 (2) the sale of stock or on the sale of an ownership
19381973 interest in an Oklahoma company, limited
19391974 liability company, or partnership where such
19401975 stock or ownership interest has been directly or
19411976 indirectly owned by the corporation, estate or
19421977 trust for a holding period of at least three (3)
19431978 years prior to the date of the transaction from
19441979 which the net capital gains arise, or
19451980 (3) the sale of real property, tan gible personal
19461981 property or intangible personal propert y located
19471982 within Oklahoma as part of the sale of all or
19481983 substantially all of the assets of an Oklahoma
19491984 company, limited liability company, or
19501985 partnership where such property has been directly
19511986 or indirectly owned by such entity owned by the
19521987 owners of such entity, and used in or derived
19531988 from such entity for a period of at least three
19541989 (3) years prior to the date of the transaction
19551990 from which the net capital gains arise,
19561991 b. "holding period" means an uninterrupted period of
19571992 time. The holding period shall inclu de any additional
19581993 period when the property was held by another
19591994 individual or entity, if such additional period is
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19862022 included in the taxpayer's holding period for the
19872023 asset pursuant to the Internal Revenue Code,
19882024 c. "Oklahoma company", "limited liability comp any", or
19892025 "partnership" means an entity whose primary
19902026 headquarters have been located in Oklahoma for at
19912027 least three (3) uninterrupted years prior to the date
19922028 of the transaction from which the net capital g ains
19932029 arise,
19942030 d. "direct" means the taxpayer directly owns the asset,
19952031 and
19962032 e. "indirect" means the taxpayer owns an in terest in a
19972033 pass-through entity (or chain of pass-through
19982034 entities) that sells the asset that gives rise to the
19992035 qualifying gains receiving ca pital treatment.
20002036 (1) With respect to sales of real property or
20012037 tangible personal property located within
20022038 Oklahoma, the deduction described in this
20032039 subsection shall not apply unless the pass-
20042040 through entity that makes the sale has held the
20052041 property for not less than five (5) uninterrupted
20062042 years prior to the date of the transaction that
20072043 created the capital gain, and each pass-through
20082044 entity included in the chain of ownership has
20092045 been a member, partner, or shareholder of the
20102046
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20362073 pass-through entity in the tier imme diately below
20372074 it for an uninterrupted period of not less than
20382075 five (5) years.
20392076 (2) With respect to sales of stock or ownership
20402077 interest in or sales of all or substantially all
20412078 of the assets of an Oklahoma company, limited
20422079 liability company, or partnership, the deduction
20432080 described in this subsection shall not apply
20442081 unless the pass-through entity that makes the
20452082 sale has held the stock or ownership interest or
20462083 the assets for not less than three (3)
20472084 uninterrupted years prior to the date of the
20482085 transaction that created the capital gain, and
20492086 each pass-through entity included in the chain of
20502087 ownership has been a member, partn er or
20512088 shareholder of the pass-through entity in the
20522089 tier immediately below it for an uninterrupted
20532090 period of not less than three (3) years.
20542091 E. The Oklahoma adjusted gross income of any individual
20552092 taxpayer shall be further adjusted as follows to arrive at Oklahoma
20562093 taxable income:
20572094 1. a. In the case of individuals, there shall be added or
20582095 deducted, as the case may be, the difference necessary
20592096 to allow personal exemptions of One Thousand Dollars
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20862124 ($1,000.00) in lieu of the personal exemptions allowed
20872125 by the Internal Revenue Code.
20882126 b. There shall be allowed an additional exemption of One
20892127 Thousand Dollars ($1,000.00) for each taxpayer or
20902128 spouse who is blind at the close of the tax year. For
20912129 purposes of this subparagraph, an individual is blind
20922130 only if the central visual acuity of the individual
20932131 does not exceed 20/200 in the better eye with
20942132 correcting lenses, or if the visual acuity of the
20952133 individual is greater than 20/200, but is accompanied
20962134 by a limitation in the fields of vision such that the
20972135 widest diameter of the visual field subtends an angle
20982136 no greater than twenty (20) degrees.
20992137 c. There shall be allowed an additional exemption of One
21002138 Thousand Dollars ($1,000.00) for each taxpayer or
21012139 spouse who is sixty-five (65) years of age or older at
21022140 the close of the tax year based upon the filing status
21032141 and federal adjusted gross income of the taxpayer.
21042142 Taxpayers with the following filing status may claim
21052143 this exemption if the federal adjusted gross income
21062144 does not exceed:
21072145 (1) Twenty-five Thousand Dollars ($25,000.00) if
21082146 married and filing jointly;
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21352174 (2) Twelve Thousand Five Hundred Dollars ($12,500.00)
21362175 if married and filing separately;
21372176 (3) Fifteen Thousand Dollars ($15,000.00) if single;
21382177 and
21392178 (4) Nineteen Thousand Dollars ($19,000.00) if a
21402179 qualifying head of household.
21412180 Provided, for taxable years beginning after December
21422181 31, 1999, amounts included in the calculation of
21432182 federal adjusted gross income pursuant to the
21442183 conversion of a traditional individual retirement
21452184 account to a Roth individual r etirement account shall
21462185 be excluded from federal adjusted gross income for
21472186 purposes of the income thresholds provided in this
21482187 subparagraph.
21492188 2. a. For taxable years beginning on or before December 31,
21502189 2005, in the case of individuals who use the standard
21512190 deduction in determining taxable income, there shall
21522191 be added or deducted, as the case may be, the
21532192 difference necessary to allow a standard deduction in
21542193 lieu of the standard dedu ction allowed by the Internal
21552194 Revenue Code, in an amount equal to the larger of
21562195 fifteen percent (15%) of the Oklahoma adjusted gross
21572196 income or One Thousand Dollars ($1,000.00), but not to
21582197 exceed Two Thousand Dollars ($2,000.00), except that
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21852225 in the case of a married individual filing a separate
21862226 return such deduction shall be the large r of fifteen
21872227 percent (15%) of such Oklahoma adjusted gross income
21882228 or Five Hundred Dollars ($500.00), but not to exceed
21892229 the maximum amount of One Thousand Dollars
21902230 ($1,000.00).
21912231 b. For taxable years beginning on or after January 1,
21922232 2006, and before January 1, 2007, in the case of
21932233 individuals who use the standard deduction in
21942234 determining taxable income, there shall be added or
21952235 deducted, as the case may be, the difference necessary
21962236 to allow a standard deduction in lieu of the standard
21972237 deduction allowed by the In ternal Revenue Code, in an
21982238 amount equal to:
21992239 (1) Three Thousand Dollars ($3,000.00), if the filing
22002240 status is married filing joint, head of household
22012241 or qualifying widow; or
22022242 (2) Two Thousand Dollars ($2,000.00), if the filing
22032243 status is single or married fili ng separate.
22042244 c. For the taxable year beginning on January 1, 2007, and
22052245 ending December 31, 2007, in the case of individuals
22062246 who use the standard deduction in determining taxable
22072247 income, there shall be added or deducted, as the case
22082248 may be, the difference n ecessary to allow a standard
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22352276 deduction in lieu of the standard deduction allowed by
22362277 the Internal Revenue Code, in an amount equal to:
22372278 (1) Five Thousand Five Hundred Dollars ($5, 500.00),
22382279 if the filing status is married filing joint or
22392280 qualifying widow; or
22402281 (2) Four Thousand One Hundred Twenty-five Dollars
22412282 ($4,125.00) for a head of household; or
22422283 (3) Two Thousand Seven Hundred Fifty Dollars
22432284 ($2,750.00), if the filing status is single or
22442285 married filing separate.
22452286 d. For the taxable year beginning on January 1, 20 08, and
22462287 ending December 31, 2008, in the case of individuals
22472288 who use the standard deduction in determining taxable
22482289 income, there shall be added or deducted, as the case
22492290 may be, the difference necessary to allow a standard
22502291 deduction in lieu of the standard deduction allowed by
22512292 the Internal Revenue Cod e, in an amount equal to:
22522293 (1) Six Thousand Five Hundred Dollars ($6,500.00), if
22532294 the filing status is married filing joint or
22542295 qualifying widow, or
22552296 (2) Four Thousand Eight Hundred Seventy-five Dollars
22562297 ($4,875.00) for a head of household, or
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22832325 (3) Three Thousand Two Hundred Fifty Dollars
22842326 ($3,250.00), if the filing status is single or
22852327 married filing separate.
22862328 e. For the taxable year beginnin g on January 1, 2009, and
22872329 ending December 31, 2009, in the case of individuals
22882330 who use the standard deduction in determining taxable
22892331 income, there shall be added or deducted, as the case
22902332 may be, the difference necessary to allow a standard
22912333 deduction in lieu of the standard deduction allowed by
22922334 the Internal Revenue Code, in an amount equal to:
22932335 (1) Eight Thousand Five Hundred Dol lars ($8,500.00),
22942336 if the filing status is married filing joint or
22952337 qualifying widow, or
22962338 (2) Six Thousand Three Hundred Seventy-five Dollars
22972339 ($6,375.00) for a head of household, or
22982340 (3) Four Thousand Two Hundred Fi fty Dollars
22992341 ($4,250.00), if the filing status is single or
23002342 married filing separate.
23012343 Oklahoma adjusted gross income shall be increased by
23022344 any amounts paid for motor vehicle excis e taxes which
23032345 were deducted as allowed by the Internal Revenue Code.
23042346 f. For taxable years beginning on or after January 1,
23052347 2010, and ending on December 31, 2016, in the case of
23062348 individuals who use the standard deduction in
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23332376 determining taxable income, there shall be added or
23342377 deducted, as the case may be, the difference necessary
23352378 to allow a standard deduction equal to the standar d
23362379 deduction allowed by the Internal Revenue Code, based
23372380 upon the amount and filing status prescribed by such
23382381 Code for purposes of fi ling federal individual income
23392382 tax returns.
23402383 g. For taxable years beginning on o r after January 1,
23412384 2017, and ending not later than December 31, 2023, in
23422385 the case of individuals who use the standard deduction
23432386 in determining taxable income, there shall be add ed or
23442387 deducted, as the case may be, the difference necessary
23452388 to allow a standard deduction in lieu of the standard
23462389 deduction allowed by the Internal Revenue Code, as
23472390 follows:
23482391 (1) Six Thousand Three Hundred Fifty Dollars
23492392 ($6,350.00) for single or married fi ling
23502393 separately,
23512394 (2) Twelve Thousand Seven Hundred Dollars
23522395 ($12,700.00) for married filing jointly o r
23532396 qualifying widower wit h dependent child, and
23542397 (3) Nine Thousand Three Hundred Fifty Dollars
23552398 ($9,350.00) for head of household.
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23822426 h. For taxable years beginning on or after January 1,
23832427 2024, in the case of individuals who use the standard
23842428 deduction in determining taxable income, the re shall
23852429 be added or deducted, as the case may be, the
23862430 difference necessary to allow a standard deduction in
23872431 lieu of the standard deduction allowed by the Internal
23882432 Revenue Code, as follows:
2389-(1) Six Thousand Three Hundred Fifty Dollars
2390-($6,350.00) for single or married filing
2433+(1) Ten Thousand Three Hundred Fifty Dollars
2434+($10,350.00) for single or married filing
23912435 separately,
2392-(2) Ten Thousand Three Hundred Fifty Dollars
2393-($10,350.00) for married filing jointly or
2436+(2) Twenty Thousand Seven Hundred Dollars
2437+($20,700.00) for married filing jointly or
23942438 qualifying widower with dependent child, and
2395-(3) Eight Thousand Three Hundred Fifty Dollars
2396-($8,350.00) for head of household.
2439+(3) Fifteen Thousand Three Hundred Dollars
2440+($15,300.00) for head of household.
23972441 3. a. In the case of resident and p art-year resident
23982442 individuals having adjusted gross income from sources
23992443 both within and without the state, the itemized or
24002444 standard deductions and personal exemptio ns shall be
24012445 reduced to an amount which is the same portion of the
24022446 total thereof as Oklahoma adjusted gross income is of
24032447 adjusted gross income. To the extent itemized
24042448 deductions include allowable moving expense, proration
24052449 of moving expense shall not be req uired or permitted
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24322477 but allowable moving expense sh all be fully deductible
24332478 for those taxpayers moving within or into Oklahoma and
24342479 no part of moving expense shall be deductible for
24352480 those taxpayers moving without or out of Oklahoma.
24362481 All other itemized or sta ndard deductions and personal
24372482 exemptions shall be subject to proration as provided
24382483 by law.
24392484 b. For taxable years beginning on or after January 1,
24402485 2018, the net amount of itemized deductions allowable
24412486 on an Oklahoma income tax return, subject to the
24422487 provisions of paragraph 24 of this subsection, shall
24432488 not exceed Seventeen Thousand Dollars ($17,000. 00).
24442489 For purposes of this subparagraph, charitable
24452490 contributions and medical expenses deductible for
24462491 federal income tax purposes shall be excluded from the
24472492 amount of Seventeen Thousand Dollars ($17,000.00) as
24482493 specified by this subparagraph.
24492494 4. A resident individual with a physical disability
24502495 constituting a substantial handicap to employment may deduct from
24512496 Oklahoma adjusted gross income such expenditures to modify a motor
24522497 vehicle, home or workplace as are necessar y to compensate for his or
24532498 her handicap. A veteran certified by the Department of Veterans
24542499 Affairs of the federal government as having a service-connected
24552500 disability shall be conclusively presumed to be an individual with a
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24822528 physical disability constitutin g a substantial handicap to
24832529 employment. The Tax Commission shall promulgate rules containing a
24842530 list of combinations of common disabilities and modifications which
24852531 may be presumed to qualify for this deduct ion. The Tax Commission
24862532 shall prescribe necessary requirements for verification.
24872533 5. a. Before July 1, 2010, the first One Thousand Five
24882534 Hundred Dollars ($1,500.00) received by any person
24892535 from the United States as salary or compensation in
24902536 any form, other than retirement benefits, as a member
24912537 of any component of the Armed Forces of the United
24922538 States shall be deducted from taxable income.
24932539 b. On or after July 1, 2010, one hundred percent (100%)
24942540 of the income received by any person from the United
24952541 States as salary or compensation in any form, other
24962542 than retirement benefits, as a member of any compone nt
24972543 of the Armed Forces of the United States shall be
24982544 deducted from taxable income.
24992545 c. Whenever the filing of a timely income tax return by a
25002546 member of the Armed For ces of the United States is
25012547 made impracticable or impossible of accomplishment by
25022548 reason of:
25032549 (1) absence from the United States, which term
25042550 includes only the states and the District of
25052551 Columbia;
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25322579 (2) absence from the State of Oklahoma while on
25332580 active duty; or
25342581 (3) confinement in a hospital within the United
25352582 States for treatment of wounds, injuries or
25362583 disease,
25372584 the time for filing a return and paying an income tax
25382585 shall be and is hereby extended without incurring
25392586 liability for interest or penalties, to the fift eenth
25402587 day of the third month following the month i n which:
25412588 (a) Such individual shall return to the United
25422589 States if the extension is granted pursuant
25432590 to subparagraph a of this paragraph, return
25442591 to the State of Oklahoma if the extension is
25452592 granted pursuant to subparagraph b of this
25462593 paragraph or be discharg ed from such
25472594 hospital if the extension is granted
25482595 pursuant to subparagraph c of this
25492596 paragraph; or
25502597 (b) An executor, administrator, or conservator
25512598 of the estate of the taxpayer is appointed,
25522599 whichever event occurs the earliest.
25532600 Provided, that the Tax Commis sion may, in its discretion, grant
25542601 any member of the Armed Forces of the United States an extension of
25552602 time for filing of income tax returns and payment of income tax
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25822630 without incurring liabilities for inter est or penalties. Such
25832631 extension may be granted o nly when in the judgment of the Tax
25842632 Commission a good cause exists therefor and may be for a period in
25852633 excess of six (6) months. A record of every such extension granted,
25862634 and the reason therefor, shall be kept.
25872635 6. Before July 1, 2010, the salary or any o ther form of
25882636 compensation, received from t he United States by a member of any
25892637 component of the Armed Forces of the United States, shall be
25902638 deducted from taxable income during the time in which the person is
25912639 detained by the enemy in a conflict, is a prisone r of war or is
25922640 missing in action and not deceased; provided, after July 1, 2010,
25932641 all such salary or compensation shall be subject to the deduction as
25942642 provided pursuant to paragraph 5 of this subsection.
25952643 7. a. An individual taxpayer, whether resident or
25962644 nonresident, may deduct an amount equal to th e federal
25972645 income taxes paid by the taxpayer during the taxable
25982646 year.
25992647 b. Federal taxes as described in subparagraph a of this
26002648 paragraph shall be deductible by any in dividual
26012649 taxpayer, whether resident or nonresident , only to the
26022650 extent they relate to income subject to taxation
26032651 pursuant to the provisions of the Oklahoma Income Tax
26042652 Act. The maximum amount allowable in the preceding
26052653 paragraph shall be prorated on the ra tio of the
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26322681 Oklahoma adjusted gross income to feder al adjusted
26332682 gross income.
26342683 c. For the purpose of this paragraph, "federal income
26352684 taxes paid" shall mean federal income taxes, surtaxes
26362685 imposed on incomes or excess profits taxes, as though
26372686 the taxpayer was on the accrual basis. In determining
26382687 the amount of deduction for federal income taxes for
26392688 tax year 2001, the amount of the deduction shall not
26402689 be adjusted by the amount of any accelerated ten
26412690 percent (10%) tax rate bracket credit or advanced
26422691 refund of the credit received during the tax year
26432692 provided pursuant to the federal Economic Growth and
26442693 Tax Relief Reconciliation Act of 2001, P.L. No. 107-
26452694 16, and the advanced refund of such credit shall not
26462695 be subject to taxation.
26472696 d. The provisions of this paragraph sh all apply to all
26482697 taxable years ending after Decemb er 31, 1978, and
26492698 beginning before January 1, 2006.
26502699 8. Retirement benefits not to exceed Five Thousand Five Hundred
26512700 Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five
26522701 Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand
26532702 Dollars ($10,000.00) for the 2006 tax year and all s ubsequent tax
26542703 years, which are received by an individual from the civil service of
26552704 the United States, the Oklahoma Public Employees Retirement System,
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26822732 the Teachers' Retirement System of Oklahoma, the Oklahoma Law
26832733 Enforcement Retirement System, the Oklahoma Firefighters Pension and
26842734 Retirement System, the Oklahoma Police Pension and Retirement
26852735 System, the employee retirement systems created by counties pursuant
26862736 to Section 951 et seq. of Title 19 of the Oklahoma Statut es, the
26872737 Uniform Retirement System for Just ices and Judges, the Oklahoma
26882738 Wildlife Conservation Department Retirement Fund, the Oklahoma
26892739 Employment Security Commission Retirement Plan, or the employee
26902740 retirement systems created by municipalities pursuant to Section 48-
26912741 101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt
26922742 from taxable income.
26932743 9. In taxable years beginning after December 3l, 1984, Social
26942744 Security benefits received by an individual sh all be exempt from
26952745 taxable income, to the extent s uch benefits are included in the
26962746 federal adjusted gross income pursuant to the provisions of Section
26972747 86 of the Internal Revenue Code, 26 U.S.C., Section 86.
26982748 10. For taxable years beginning after December 3 1, 1994, lump-
26992749 sum distributions from employer plan s of deferred compensation,
27002750 which are not qualified plans within the meaning of Section 401(a)
27012751 of the Internal Revenue Code, 26 U.S.C., Section 401(a), and which
27022752 are deposited in and accounted for within a separate bank account or
27032753 brokerage account in a fi nancial institution within this state,
27042754 shall be excluded from taxable income in the same manner as a
27052755 qualifying rollover contribution to an individual retirement account
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27322783 within the meaning of Section 408 of the Internal Revenue Code, 26
27332784 U.S.C., Section 408. Amounts withdrawn from such bank or bro kerage
27342785 account, including any earnings thereon, shall be included in
27352786 taxable income when withdrawn in the same manner as withdrawals from
27362787 individual retirement acco unts within the meaning of Section 408 of
27372788 the Internal Revenue Code.
27382789 11. In taxable years beginning after December 31, 1995,
27392790 contributions made to and interest received from a medical savings
27402791 account established pursuant to Sections 2621 through 2623 of T itle
27412792 63 of the Oklahoma Statutes shall be exempt f rom taxable income.
27422793 12. For taxable years beginning after December 31, 1996, the
27432794 Oklahoma adjusted gross income of any individual taxpayer who is a
27442795 swine or poultry producer may be further adjusted for the deduction
27452796 for depreciation allowed for new constr uction or expansion costs
27462797 which may be computed using the same depreciation method elected for
27472798 federal income tax purposes except that the useful life shall be
27482799 seven (7) years for purposes of this paragraph . If depreciation is
27492800 allowed as a deduction in de termining the adjusted gross income of
27502801 an individual, any depreciation calculated and claimed pursuant to
27512802 this section shall in no event be a duplication of any depreciation
27522803 allowed or permitted on the fede ral income tax return of the
27532804 individual.
27542805 13. a. In taxable years beginning before January 1, 2005,
27552806 retirement benefits not to exceed the amounts
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27822834 specified in this paragraph, which are received by an
27832835 individual sixty-five (65) years of age or older and
27842836 whose Oklahoma adjusted gr oss income is Twenty-five
27852837 Thousand Dollars ($25,000.00) or less if the filing
27862838 status is single, head of household, or married filing
27872839 separate, or Fifty Thousand Dollars ($50,000.00) or
27882840 less if the filing status is married filing joint or
27892841 qualifying widow, shall be exempt from taxable income.
27902842 In taxable years beginning after December 31, 2004,
27912843 retirement benefits not to exceed the amounts
27922844 specified in this paragraph, which are received by an
27932845 individual whose Oklahoma adjusted gross income is
27942846 less than the qualifying amount specified in this
27952847 paragraph, shall be exempt from tax able income.
27962848 b. For purposes of this paragraph, the qualifying amount
27972849 shall be as follows:
27982850 (1) in taxable years beginning after December 31,
27992851 2004, and prior to January 1, 2007, the
28002852 qualifying amount shall be Thirty-seven Thousand
28012853 Five Hundred Dollars ($37, 500.00) or less if the
28022854 filing status is single, head of household, or
28032855 married filing separate, or Seventy-five Thousand
28042856 Dollars ($75,000.00) or less if the filing status
28052857 is married filing jointly or qualifying widow,
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28322885 (2) in the taxable year beginning Janua ry 1, 2007,
28332886 the qualifying amount shall be Fifty Thousand
28342887 Dollars ($50,000.00) or less if the filing status
28352888 is single, head of household, or married filing
28362889 separate, or One Hundred Thous and Dollars
28372890 ($100,000.00) or less if the filing status is
28382891 married filing jointly or qualifying widow,
28392892 (3) in the taxable year beginning January 1, 2008,
28402893 the qualifying amount shall be Sixty-two Thousand
28412894 Five Hundred Dollars ($62,500.00) or less if the
28422895 filing status is single, head of household, or
28432896 married filing separate, or One Hundred Twenty-
28442897 five Thousand Dollars ($125,000.00) or less if
28452898 the filing status is married filing jointly or
28462899 qualifying widow,
28472900 (4) in the taxable year beginning January 1, 2009,
28482901 the qualifying amount shall be One Hundred
28492902 Thousand Dollars ($100,000.00) or less if the
28502903 filing status is single, head of household, or
28512904 married filing separate, or Two Hundred Thousand
28522905 Dollars ($200,000.00) or less if the filing
28532906 status is married filing joint ly or qualifying
28542907 widow, and
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28812935 (5) in the taxable year beginning January 1, 2010,
28822936 and subsequent taxable years, there shall be no
28832937 limitation upon the qualifying amount.
28842938 c. For purposes of this paragraph, "retirement benefits"
28852939 means the total distributions or withdrawals from the
28862940 following:
28872941 (1) an employee pension benefit plan w hich satisfies
28882942 the requirements of Section 401 of the Internal
28892943 Revenue Code, 26 U.S.C., Section 401,
28902944 (2) an eligible deferred compensation plan that
28912945 satisfies the requirements of Section 457 of the
28922946 Internal Revenue Code, 26 U.S.C., Section 457,
28932947 (3) an individual retirement account, annuity or
28942948 trust or simplified employee pension that
28952949 satisfies the requirements of Section 408 of the
28962950 Internal Revenue Code, 26 U.S.C., Section 408,
28972951 (4) an employee annuity subject to the provisions of
28982952 Section 403(a) or (b) of the Internal Revenue
28992953 Code, 26 U.S.C., Section 403(a) or (b),
29002954 (5) United States Retirement Bonds which satisfy the
29012955 requirements of Section 86 of the Internal
29022956 Revenue Code, 26 U.S.C., Sectio n 86, or
29032957 (6) lump-sum distributions from a retirement plan
29042958 which satisfies the requirements of Section
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29312986 402(e) of the Internal Revenue Code, 26 U.S.C.,
29322987 Section 402(e).
29332988 d. The amount of the exemption provided by this paragraph
29342989 shall be limited to Five Thousa nd Five Hundred Dollars
29352990 ($5,500.00) for the 2004 tax year, Seven Thous and Five
29362991 Hundred Dollars ($7,500.00) for the 2005 tax year and
29372992 Ten Thousand Dollars ($10,000.00) for the tax year
29382993 2006 and for all subsequent tax years. Any individual
29392994 who claims the exemption provided for in paragraph 8
29402995 of this subsection shall not be pe rmitted to claim a
29412996 combined total exemption pursuant to this paragraph
29422997 and paragraph 8 of this subsection in an amount
29432998 exceeding Five Thousand Five Hundred Dollars
29442999 ($5,500.00) for the 20 04 tax year, Seven Thousand Five
29453000 Hundred Dollars ($7,500.00) for the 2 005 tax year and
29463001 Ten Thousand Dollars ($10,000.00) for the 2006 tax
29473002 year and all subsequent tax years.
29483003 14. In taxable years beginning after December 31, 1999, for an
29493004 individual engaged in production agriculture who has filed a
29503005 Schedule F form with the taxpayer's federal income tax return for
29513006 such taxable year, there shall be excluded from taxable income any
29523007 amount which was included as federal taxable income or federal
29533008 adjusted gross income and which consists of the discharge of an
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29803036 obligation by a creditor of the taxpayer incurred to finance the
29813037 production of agricultural products.
29823038 15. In taxable years beginning December 31, 2000, an amount
29833039 equal to one hundred percent (100%) of the am ount of any scholarship
29843040 or stipend received from participation in the Oklahoma Police Corps
29853041 Program, as established in Section 2-140.3 of Title 47 of the
29863042 Oklahoma Statutes shall be exempt from taxable income.
29873043 16. a. In taxable years beginning after December 31, 2001,
29883044 and before January 1, 2005, th ere shall be allowed a
29893045 deduction in the amount of contributions to accounts
29903046 established pursuant to the Oklahoma College Savings
29913047 Plan Act. The deduction shall equal the amount of
29923048 contributions to accounts, but in no event shall the
29933049 deduction for each cont ributor exceed Two Thousand
29943050 Five Hundred Dollars ($2,500.00) each taxable year for
29953051 each account.
29963052 b. In taxable years beginning after December 31, 2004,
29973053 each taxpayer shall be allowed a deduction for
29983054 contributions to accounts established pursuant to the
29993055 Oklahoma College Savings Plan Act. The maximum annual
30003056 deduction shall equal the amount of contributions to
30013057 all such accounts plus any contributions to such
30023058 accounts by the taxpayer for prior taxable years aft er
30033059 December 31, 2004, which were not deducted, but in no
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30303087 event shall the deduction for each tax year exceed Ten
30313088 Thousand Dollars ($10,000.00) for each individual
30323089 taxpayer or Twenty Thousand Dollars ($20,000.00) for
30333090 taxpayers filing a joint return . Any amount of a
30343091 contribution that is not deducted by the taxpayer in
30353092 the year for which the contribution is made may be
30363093 carried forward as a deduction from income for the
30373094 succeeding five (5) years. For taxable years
30383095 beginning after December 31, 2005, deductions may be
30393096 taken for contributions and rollovers made during a
30403097 taxable year and up to April 15 of the succeeding
30413098 year, or the due date of a taxpayer's state income tax
30423099 return, excluding extensions, whichever is later.
30433100 Provided, a deduction for the same contri bution may
30443101 not be taken for two (2) different taxa ble years.
30453102 c. In taxable years beginning after December 31, 2006,
30463103 deductions for contributions made pursuant to
30473104 subparagraph b of this paragraph shall be limited as
30483105 follows:
30493106 (1) for a taxpayer who qualifi ed for the five-year
30503107 carryforward election and who t akes a rollover or
30513108 nonqualified withdrawal during that period, the
30523109 tax deduction otherwise available pursuant to
30533110 subparagraph b of this paragraph shall be reduced
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30803138 by the amount which is equal to the rollo ver or
30813139 nonqualified withdrawal, and
30823140 (2) for a taxpayer who elects to take a rollover or
30833141 nonqualified withdrawal within the same tax year
30843142 in which a contribution was made to the
30853143 taxpayer's account, the tax deduction otherwise
30863144 available pursuant to subparag raph b of this
30873145 paragraph shall be reduced by the amou nt of the
30883146 contribution which is equal to the rollover or
30893147 nonqualified withdrawal.
30903148 d. If a taxpayer elects to take a rollover on a
30913149 contribution for which a deduction has been taken
30923150 pursuant to subparagra ph b of this paragraph within
30933151 one (1) year of the date of contribution, the amount
30943152 of such rollover shall be included in the adjusted
30953153 gross income of the taxpayer in the taxable year of
30963154 the rollover.
30973155 e. If a taxpayer makes a nonqualified withdrawal of
30983156 contributions for which a deduction was taken pursuant
30993157 to subparagraph b of this paragra ph, such nonqualified
31003158 withdrawal and any earnings thereon shall be included
31013159 in the adjusted gross income of the taxpayer in the
31023160 taxable year of the nonqualified withdrawal .
31033161 f. As used in this paragraph:
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31303189 (1) "non-qualified withdrawal" means a withdrawal
31313190 from an Oklahoma College Savings Plan account
31323191 other than one of the following:
31333192 (a) a qualified withdrawal,
31343193 (b) a withdrawal made as a result of the death
31353194 or disability of the designated beneficiary
31363195 of an account,
31373196 (c) a withdrawal that is made on the account of
31383197 a scholarship or the allowance or payment
31393198 described in Section 135(d)(1)(B) or (C) or
31403199 by the Internal Revenue Code, received by
31413200 the designated beneficiary to the ex tent the
31423201 amount of the refund does not exceed the
31433202 amount of the scholarship, allowance, or
31443203 payment, or
31453204 (d) a rollover or change of designated
31463205 beneficiary as permitted by subsection F of
31473206 Section 3970.7 of Title 70 of Oklahoma
31483207 Statutes, and
31493208 (2) "rollover" means the transfer of funds from the
31503209 Oklahoma College Savings Plan to any other plan
31513210 under Section 529 of the Internal Revenue Code.
31523211 17. For taxable years beginning after December 31, 2005,
31533212 retirement benefits received by an individual from any compo nent of
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31803240 the Armed Forces of the United States in an amount not to exceed the
31813241 greater of seventy-five percent (75%) of such benefits or Ten
31823242 Thousand Dollars ($10,000.00) shall be exempt from taxable income
31833243 but in no case less than the amount of the exemptio n provided by
31843244 paragraph 13 of this subsection.
31853245 18. For taxable years beginning after December 31, 2006,
31863246 retirement benefits received by federal civil service retirees,
31873247 including survivor annuities, paid in lieu of Social Security
31883248 benefits shall be exempt from taxable income t o the extent such
31893249 benefits are included in the federal adjusted gross income pursuant
31903250 to the provisions of Section 86 of the Internal Revenue Code, 26
31913251 U.S.C., Section 86, according to the following schedule:
31923252 a. in the taxable year beginning January 1, 2007 , twenty
31933253 percent (20%) of such bene fits shall be exempt,
31943254 b. in the taxable year beginning January 1, 2008, forty
31953255 percent (40%) of such benefits shall be exempt,
31963256 c. in the taxable year beginning January 1, 2009, sixty
31973257 percent (60%) of such benefits shall be exempt,
31983258 d. in the taxable year beginning January 1, 2010, eighty
31993259 percent (80%) of such benefits shall be exempt, and
32003260 e. in the taxable year beginning January 1, 2011, and
32013261 subsequent taxable years, one hundred percent (100%)
32023262 of such benefits shall be exemp t.
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32293290 19. a. For taxable years beginning after De cember 31, 2007, a
32303291 resident individual may deduct up to Ten Thousand
32313292 Dollars ($10,000.00) from Oklahoma adjusted gross
32323293 income if the individual, or the dependent of the
32333294 individual, while living, donates one or more human
32343295 organs of the individual to another human being for
32353296 human organ transplantation. As used in this
32363297 paragraph, "human organ" means all or part of a liver,
32373298 pancreas, kidney, intestine, lung, or bone marrow. A
32383299 deduction that is claimed under th is paragraph may be
32393300 claimed in the taxable year in which the human organ
32403301 transplantation occurs.
32413302 b. An individual may claim this deduction only once, and
32423303 the deduction may be claimed only for unreimbursed
32433304 expenses that are incurred by the individual and
32443305 related to the organ donation of the individual.
32453306 c. The Oklahoma Tax Commission shall promulgate rules to
32463307 implement the provisions of this paragraph which shall
32473308 contain a specific list of expenses which may be
32483309 presumed to qualify for the deduction. The Tax
32493310 Commission shall prescribe necessary requirements for
32503311 verification.
32513312 20. For taxable years beginning after December 31, 2009, there
32523313 shall be exempt from taxable income any amount received by the
32533314
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32793341 beneficiary of the death benefit for an emergency medical technician
32803342 or a registered emergency medical responde r provided by Section 1-
32813343 2505.1 of Title 63 of the Oklahoma Statutes.
32823344 21. For taxable years beginning after December 31, 2008,
32833345 taxable income shall be increased by any unemployment compensation
32843346 exempted under Section 85(c) of the Internal Revenue Code, 26
32853347 U.S.C., Section 85(c)(2009).
32863348 22. For taxable years beginning after December 31, 2008, there
32873349 shall be exempt from taxable income a ny payment in an amount less
32883350 than Six Hundred Dollars ($600.00) rec eived by a person as an award
32893351 for participation in a compet itive livestock show event. For
32903352 purposes of this paragraph, the payment shall be treated as a
32913353 scholarship amount paid by the enti ty sponsoring the event and the
32923354 sponsoring entity shall cause the p ayment to be categorized as a
32933355 scholarship in its books and records.
32943356 23. For taxable years beginning on or after January 1, 2016,
32953357 taxable income shall be increased by any amount of stat e and local
32963358 sales or income taxes deducted under 26 U.S.C., Section 164 of the
32973359 Internal Revenue Code. If the amount of state and local taxes
32983360 deducted on the federal return is limited, taxable income on the
32993361 state return shall be increased only by the amoun t actually deducted
33003362 after any such limitations are applied.
33013363 24. For taxable years beginning after December 31, 2020, each
33023364 taxpayer shall be allowed a deduction for contributions to accounts
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33293392 established pursuant to the Achieving a Better Life Experienc e
33303393 (ABLE) Program as established in Section 4001.1 et seq. of Title 56
33313394 of the Oklahoma Statutes. For any tax year, the deduction provi ded
33323395 for in this paragraph shall not exceed Ten Thousand Dollars
33333396 ($10,000.00) for an individual taxpayer or Twenty Thousand Dollars
33343397 ($20,000.00) for taxpayers filing a joint return. Any amount of
33353398 contribution not deducted by the taxpayer in the tax year fo r which
33363399 the contribution is ma de may be carried forward as a deduction from
33373400 income for up to five (5) tax years. Deductions may be taken for
33383401 contributions made during the tax year and throug h April 15 of the
33393402 succeeding tax year, or through the due date of a taxpayer's state
33403403 income tax return excluding extensions, whichever is later.
33413404 Provided, a deduction for the same contri bution may not be taken in
33423405 more than one (1) tax year.
33433406 F. 1. For taxable years beginning after December 31, 2004, a
33443407 deduction from the Oklahoma adjusted gross inc ome of any individual
33453408 taxpayer shall be allowed for qualifying gains receiving capital
33463409 treatment that are included in the federal adjusted gross income of
33473410 such individual taxpayer during the taxable year.
33483411 2. As used in this subsection:
33493412 a. "qualifying gains receiving capital treatment" means
33503413 the amount of net capital gains, as defined in Section
33513414 1222(11) of the Internal Revenue Code, included in an
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33783442 individual taxpayer's federal income tax return that
33793443 result from:
33803444 (1) the sale of real property or tangible personal
33813445 property located within Oklahoma that has been
33823446 directly or indirectly owned by the in dividual
33833447 taxpayer for a holding period of at least five
33843448 (5) years prior to the date of the transaction
33853449 from which such net capital gai ns arise,
33863450 (2) the sale of stock or the sale of a direct or
33873451 indirect ownership interest in an Oklahoma
33883452 company, limited lia bility company, or
33893453 partnership where such stock or ownership
33903454 interest has been directly or indirectly owned by
33913455 the individual taxpayer for a holding period of
33923456 at least two (2) years prior to the date of the
33933457 transaction from which the net capital gains
33943458 arise, or
33953459 (3) the sale of real property, tangible personal
33963460 property or intangible personal property located
33973461 within Oklahoma as part of the sale of all or
33983462 substantially all of the assets of an Oklahoma
33993463 company, limited liability company, or
34003464 partnership or an Ok lahoma proprietorship
34013465 business enterprise where such property has been
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34283493 directly or indirectly owned by such entity or
34293494 business enterprise or owned by the owners of
34303495 such entity or business enterprise for a period
34313496 of at least two (2) years prior to the date of
34323497 the transaction from which the net capital gains
34333498 arise,
34343499 b. "holding period" means an uninterrupted period of
34353500 time. The holding period shall include any additional
34363501 period when the property was held by another
34373502 individual or entity, if such additional per iod is
34383503 included in the taxpayer's holding period for the
34393504 asset pursuant to the Internal Revenue Code,
34403505 c. "Oklahoma company," "limited liability company," or
34413506 "partnership" means an entity whose primary
34423507 headquarters have been located in Oklahoma for at
34433508 least three (3) uninterrupted years prior to the date
34443509 of the transaction fr om which the net capital gains
34453510 arise,
34463511 d. "direct" means the individual taxpayer directly owns
34473512 the asset,
34483513 e. "indirect" means the individual taxpayer owns an
34493514 interest in a pass-through entity (or chain of pass-
34503515 through entities) that sells the asset that giv es rise
34513516 to the qualifying gains receiving capital treatment.
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34783544 (1) With respect to sales of real property or
34793545 tangible personal property located within
34803546 Oklahoma, the deduction described in this
34813547 subsection shall not apply unless the pass-
34823548 through entity that ma kes the sale has held the
34833549 property for not less than five (5) u ninterrupted
34843550 years prior to the date of the transaction that
34853551 created the capital gain, and each pass-through
34863552 entity included in the chain of ownership has
34873553 been a member, partner, or shareholder of the
34883554 pass-through entity in the tier immediately below
34893555 it for an uninterrupted period of not less than
34903556 five (5) years.
34913557 (2) With respect to sales of stock or ownership
34923558 interest in or sales of all or substantially all
34933559 of the assets of an Oklahoma company, limited
34943560 liability company, partnership or Oklahoma
34953561 proprietorship business enterprise, the deduction
34963562 described in this subsection shall not apply
34973563 unless the pass-through entity that mak es the
34983564 sale has held the stock or ownership interest for
34993565 not less than two (2) uninterrupted years prior
35003566 to the date of the transact ion that created the
35013567 capital gain, and each pass-through entity
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35283595 included in the chain of ownership has been a
35293596 member, partner or shareholder of the pass-
35303597 through entity in the tier immediately be low it
35313598 for an uninterrupted period of not less than two
35323599 (2) years. For purposes of this division,
35333600 uninterrupted ownership prior to July 1, 2007,
35343601 shall be included in the determination o f the
35353602 required holding period prescribed by this
35363603 division, and
35373604 f. "Oklahoma proprietorship b usiness enterprise" means a
35383605 business enterprise whose income and expenses have
35393606 been reported on Schedule C or F of an individual
35403607 taxpayer's federal income tax retur n, or any similar
35413608 successor schedule published by the Internal Revenue
35423609 Service and whose pri mary headquarters have been
35433610 located in Oklahoma for at least three (3)
35443611 uninterrupted years prior to the date of the
35453612 transaction from which the net capital gains ari se.
35463613 G. 1. For purposes of computing its Oklahoma taxable income
35473614 under this section, the di vidends-paid deduction otherwise allow ed
35483615 by federal law in computing net income of a real estate investment
35493616 trust that is subject to federal income tax shall be add ed back in
35503617 computing the tax imposed by this state under this title if the real
35513618 estate investment trust is a captive real estate i nvestment trust.
35523619
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35783646 2. For purposes of computing its Oklahoma taxable income under
35793647 this section, a taxpayer shall add back other wise deductible rents
35803648 and interest expenses paid to a captive real est ate investment trust
35813649 that is not subject to the provisions of paragraph 1 of this
35823650 subsection. As used in this subsection:
35833651 a. the term "real estate investment trust" or "REIT"
35843652 means the meaning ascribed to such term in Section 856
35853653 of the Internal Revenue Code,
35863654 b. the term "captive real estate investment trust " means
35873655 a real estate investment trust, the shares or
35883656 beneficial interests of which are not regularly traded
35893657 on an established secur ities market and more than
35903658 fifty percent (50%) of the voting power o r value of
35913659 the beneficial interests or shares of which are owned
35923660 or controlled, directly or indirectly, or
35933661 constructively, by a single entity that is:
35943662 (1) treated as an association taxable as a
35953663 corporation under the Internal Revenue Code, and
35963664 (2) not exempt from federal income ta x pursuant to
35973665 the provisions of Section 501(a) of the Internal
35983666 Revenue Code.
35993667 The term shall not include a real estate investment
36003668 trust that is intended to be regula rly traded on an
36013669 established securities market, and that satisfie s the
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36283697 requirements of Secti on 856(a)(5) and (6) of the U.S.
36293698 Internal Revenue Code by reason of Section 856(h)(2)
36303699 of the Internal Revenue Code,
36313700 c. the term "association taxable as a corporati on" shall
36323701 not include the following entities:
36333702 (1) any real estate investment trust as defined in
36343703 paragraph a of this subsec tion other than a
36353704 "captive real estate inv estment trust", or
36363705 (2) any qualified real estate investment trust
36373706 subsidiary under Section 856(i) of the Internal
36383707 Revenue Code, other than a qualified REIT
36393708 subsidiary of a "captive real estate investment
36403709 trust", or
36413710 (3) any Listed Australian Property Trust (meaning an
36423711 Australian unit trust registered as a "Managed
36433712 Investment Scheme" under the Australian
36443713 Corporations Act in which the principal class of
36453714 units is listed on a recognized stoc k exchange in
36463715 Australia and is regularly traded on an
36473716 established securities market), or an entity
36483717 organized as a trust, provided that a Listed
36493718 Australian Property Trust owns or controls,
36503719 directly or indirectly, seventy-five percent
36513720
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36773747 (75%) or more of the vo ting power or value of the
36783748 beneficial interests or shares of such trust, or
36793749 (4) any Qualified Foreign Entity, meaning a
36803750 corporation, trust, association or partnership
36813751 organized outside the laws of the United States
36823752 and which satisfies the following criteri a:
36833753 (a) at least seventy-five percent (75%) of the
36843754 entity's total asset value at the close of
36853755 its taxable year is represented by real
36863756 estate assets, as defined in Section
36873757 856(c)(5)(B) of the Internal Revenue Code,
36883758 thereby including shares or certificates of
36893759 beneficial interest in an y real estate
36903760 investment trust, cash and cash equivalents,
36913761 and U.S. Government securities,
36923762 (b) the entity receives a dividend-paid
36933763 deduction comparable to Section 561 of the
36943764 Internal Revenue Code, or is exempt from
36953765 entity level tax,
36963766 (c) the entity is required to distribute at
36973767 least eighty-five percent (85%) of its
36983768 taxable income, as computed in the
36993769 jurisdiction in which it is organized, to
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37263797 the holders of its shares or certificates of
37273798 beneficial interest on an annual basis,
37283799 (d) not more than ten percent ( 10%) of the
37293800 voting power or value in such entity is held
37303801 directly or indirectly or constructively by
37313802 a single entity or individual, or the shares
37323803 or beneficial interests of such entity are
37333804 regularly traded on an established
37343805 securities market, and
37353806 (e) the entity is organized in a country which
37363807 has a tax treaty with the United States.
37373808 3. For purposes of this subsection, the constructive ownership
37383809 rules of Section 318(a) of the Internal Revenue Code, as modified by
37393810 Section 856(d)(5) of the Internal Revenue Code, shall apply in
37403811 determining the ownership of s tock, assets, or net profits of any
37413812 person.
37423813 4. A real estate investment trust that does not become
37433814 regularly traded on an established securities market within one (1)
37443815 year of the date on which it first becomes a real estate i nvestment
37453816 trust shall be deeme d not to have been regularly traded on an
37463817 established securities market, retroactive to the date it first
37473818 became a real estate investment trust, and shall file an amended
37483819 return reflecting such retroactiv e designation for any tax year or
37493820 part year occurring during its initial year of status as a real
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37763848 estate investment trust. For purposes of this subsection, a real
37773849 estate investment trust becomes a real estate investment trust on
37783850 the first day it has both met the requirements o f Section 856 of the
37793851 Internal Revenue Code and has elected to be treated as a real estate
37803852 investment trust pursuant to Section 856(c)(1) of the Internal
37813853 Revenue Code.
37823854 SECTION 3. This act shall beco me effective November 1, 2023.
3783-
3784-59-1-7141 MAH 01/17/23
3855+COMMITTEE REPORT BY: COMMITTEE ON APPROPRI ATIONS
3856+April 12, 2023 - DO PASS