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ENGROSSED HOUSE
BILL NO. 4092 By: Caldwell (Trey) and West
(Rick) of the House
and
Jech of the Senate
[ revenue and taxation – banks – associations –
credit unions – associations – institutions –
deductions – loans – terms - effective date ]
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLA HOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 2370, is
amended to read as follow s:
Section 2370. A. For taxable years beginning after December
31, 2021, for the privilege of doing business within this state,
every state banking association, national banking associat ion and
credit union organized under the law s of this state, located or
doing business within the limits of the State of Oklahoma shall
annually pay to this stat e a privilege tax at the rate o f four
percent (4%) of the amount of the taxable income as provi ded in this
section.
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B. 1. The privilege tax levied by this sectio n shall be in
addition to the Business Activity Tax levied in Section 1218 of this
title and the franchise tax levied in Article 12 of this title and
in lieu of the tax levied by Section 2 355 of this title and in lieu
of all taxes levied by the State of Ok lahoma, or any subdivision
thereof, upon the shares of stock or personal property of any
banking association or credit union subject to taxation under this
section.
2. Nothing in this section shall be construed to exempt the
real property of any banking a ssociations or credit unions from
taxation to the same extent, according to its value, as oth er real
property is taxed. Nothing herein shall be construed to exempt an
association from pay ment of any fee or tax authorized or levied
pursuant to the banking laws.
3. Personal property which is subject to a lease agreement
between a bank or credit un ion, as lessor, and a nonbanking business
entity or individual, as lessee, is not exempt from p ersonal
property ad valorem taxation . Provided further, that it sha ll be
the duty of the lessee of such personal propert y to return sworn
lists or schedules of their taxable property within each county to
the county assessor of such county as provided in Sections 2433 and
2434 of this title.
C. Any tax levied under this section shall accrue on the last
day of the taxable y ear and be payable as provided in Sectio n 2375
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of this title. The accrual of such tax for the first taxable year
to which this act app lies, shall apply notwithstanding the prior
accrual of a tax in the same taxable year based upon the net income
of the next preceding taxable year; provided, how ever, any
additional deduction enuring to the benefit of the taxpayer shall be
deducted in accordance with the optional transitional deduct ion
procedures in Sectio n 2354 of this title.
D. The basis of the tax shall be United States taxable income
as defined in paragraph 10 of Section 2353 of this title and any
adjustments thereto under the provisio ns of Section 2358 of this
title with the following adjustments:
1. There shall be deducted all interest income on oblig ations
of the United States government a nd agencies thereof not otherwise
exempted and all interest income on obligations of the State of
Oklahoma or political subdivisions thereo f, including public trus t
authorities, not otherwise exempted under the laws of this state;
and
2. Expense deductions claimed in arriving at taxable income
under paragraph 10 of Section 2353 of this title shall be reduced by
an amount equal to fifty perce nt (50%) of excluded int erest income
on obligations of the United States gove rnment or agencies thereof
and obligations of the State of Oklahoma or political subdivisions
thereof.
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E. 1. Except as otherwise prov ided in paragraph 2 of this
subsection, before January 1, 2017, ther e shall be allowed a credit
against the tax levied in subsection A of this section in an amou nt
equal to the amount of taxable income received by a participating
financial institution as d efined in Section 90.2 of Title 62 of the
Oklahoma Statutes pursuant to a loan made under the Rural Economic
Development Loan Act. Such credit shall be limited each year to
five percent (5%) of the amount of annual payroll certified by the
Oklahoma Rural Economic Development Loan Program Review Boa rd
pursuant to the provi sions of paragraph 3 of subsection B of Section
90.4 of Title 62 of the Oklahoma Statutes wit h respect to the loan
made by the participating financial institution and may be claimed
for any number of years necessary until the amount of total credits
claimed is equal to the total amount of taxable income rece ived by
the participating financial inst itution pursuant to the loan . Any
credit allowed but not used in a taxable year may be carried forward
for a period not to exceed five (5) taxable years. In no event
shall a credit allowed pursuant to the provision s of this subsection
be transferable or refundable.
2. No credit otherwise authorized by the provisions of this
subsection may be clai med for any event, transaction, investment,
expenditure or other act occurring on or after July 1, 2010, for
which the credit would otherwise be allowable . The provisions of
this paragraph shall cease to be operative on July 1, 2012 .
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Beginning July 1, 20 12, the credit authorized by this subsection may
be claimed for any event, transaction, investment, expenditure or
other act occurring on or after July 1, 2012, according to the
provisions of this subsection.
F. For all taxable years commencing after December 31, 2023,
national banking associations, state banks, trust companies, savings
and loan associations, and other lending institutions shall be
allowed as a deduction from net income, as defined in this
subsection, the net interest income received from qualified
agricultural real estate loans attributed to Oklahoma , net interest
income received from agriculture operating loans attributed to
Oklahoma, and the net interest income received from single family
residence loans attributed to O klahoma, to the extent such interest
is included in the Oklahoma ta xable income of a corporation.
As used in this subsection:
1. "Interest" means interest on an indebtedness attr ibuted to
Oklahoma and incurred in the ordinary course of the active conduct
of any business and interest on indebtedness incurred that is
secured by a single fami ly residence;
2. "Qualified agricultural real estate loans" means loans made
on real property that are substantially used for the production of
one or more agricultural products and:
a. have maturities of not less than five (5) years and
not more than forty (40) years,
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b. are secured by a first lien interes t in real estate,
except that the loans may be secured by a second lien
interest if the institution also holds the first lien
on the real property, and
c. have an outstanding loan balance, which when made, is
less than eighty-five (85%) percent of the appraised
value of the real estate, except loans for which
private mortgage insurance is obtained may exceed
eighty-five percent (85%) of the appraised value of
the real estate to the extent a loan amount in excess
of eighty-five (85%) percent is covered by su ch
insurance;
3. "Agriculture Operating Loans" means loans made for the
purpose of:
a. the purchase, care, feeding, or refinancing of
livestock or poultry,
b. purchasing seed, and
c. the purchase and maintenance of equipment, which shall
include, but is not limited to, fences, barns, sheds,
tractors, combines, and vehicles;
4. "Single family residence" means a residen ce that:
a. is the principal residence of its o ccupant,
b. is located in Oklahoma, in a rural area that is not
within the city limits of a t own with a population of
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five thousand (5,000) or more as determined by the
most recent census for which data is availab le, and
c. is purchased or improved with the proceeds of the
loan;
5. "Net interest income received from qualified agricultural
real estate loans attributed to Oklahoma" means the product of the
ratio of the interest income earned on qualified agricultural real
estate loans over total interest income earned, in relation to the
net income of the national banking association, state bank, tr ust
company, savings and loan asso ciation, or other lending ins titution
without regard to this deduction;
6. "Net interest income received from agricultural operating
loans attributed to Oklahoma" means the product of the ratio of the
interest income earn ed on agricultural operating loans over total
interest income earned, in relation to t he net income of the
national banking association, state bank, trust company, savings and
loan association, or other lending institution without regard to
this deduction; and
7. "Net interest income received from single family residence
loans attributed to Oklahoma" means the product of the ratio of the
interest income earned on single family residence loans over total
interest income earned, in relation to the net income of the
national banking association, state bank, trust company, savings and
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loan association, or other lending institution without regard to
this deduction.
SECTION 2. This act shall become effective N ovember 1, 2024.
Passed the House of Representatives the 11th day of March, 2024.
Presiding Officer of the House
of Representatives
Passed the Senate the _________ day of ___________, 2024.
Presiding Officer of the Senate