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STATE OF OKLAHOMA
1st Session of the 59th Legi slature (2023)
COMMITTEE SUBSTITUTE
FOR ENGROSSED
SENATE BILL NO. 1063 By: Garvin of the Senate
and
Lawson of the House
COMMITTEE SUBSTITUTE
[ income tax - credit - report - effective date ]
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 2357.231 of Title 68, unless
there is created a duplication in number ing, reads as follows:
A. As used in this section:
1. "Child" means an individual who is five (5) years of age or
less;
2. "Child care and education prov ider" means a person who owns
or operates an eligibl e program;
3. "Child care expense" means the cost of locating safe and
dependable services for th e care of a minor child of an employee;
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4. "Eligible program" means an applicable child care and early
childhood education program that has applied to participate in the
quality rating and improvement syst em and has been assigned a
quality scale rating;
5. "Eligible staff member" means an individual who is employed
with, or who is a self-employed individual providing child care and
early childhood education for, an eligible program for at least six
(6) months of the taxable year. Eligible staff member does not
include certificated teaching and administrative staff employed by
programs established pursuant to applicable provisions of law;
6. "Employee" means a person to whom wages or other
compensation is paid by an employer;
7. "Employer" means any sole proprietor or lawfully recognized
business entity engaged in lawful business activity;
8. "Licensed child care facility" means a person or entity
lawfully authorized to provide child care services within the state
and which is enrolled in Oklahoma's Quality Rating and Improvement
System (QRIS);
9. "Qualified child care worker" means a person employed for at
least eight (8) consecutive months during the calen dar year
corresponding to the income tax year fo r which the credit authorized
by this section is claimed and who performs classroom services for a
licensed child care facility and who is enrolled in O klahoma's
Professional Development Ladder (PDL); and
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10. "Quality scale rating" means the rating of an e ligible
program under which the rating is expressed in terms of stars.
B. For taxable years be ginning on or after January 1, 2024, and
ending not later tha n December 31, 2028, subject to the limitations
prescribed by this subsection and subsection D of this section,
there shall be allowed as a credit against the tax imposed pursuant
to Section 2355 of Title 68 of the Oklahoma Statutes, an amount
equal to:
1. Thirty percent (30%) of the amount expended by an e mployer
for assistance provided by the employer to an employee for the
employee's direct expenses of child car e;
2. Thirty percent (30%) of the amount expended by an employer
for the cost of operating a child care facility primarily used by
dependents of the employees of such empl oyer, excluding any payments
made by the parent or guardian of such dependent such as tuition or
fees;
3. Fifty percent (50%) of the amount expended by the employer
to construct, either through new construction or rehabilitation of a
structure, located not more than two (2) miles from the site at
which employees perform primary work duties unless working remotely,
to provide child care services to the children of th e employees; or
4. Fifty percent (5 0%) of the amount expended by the employer
to establish, construct, acquire or develop a child care facility in
conjunction with one or more other entities, whether for -profit
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business entities, nonprofit entities or other lawfully organized
entities, to provide child care services.
C. The total credit amount which may be claimed by an employer
pursuant to the provisions of this section shall not exceed:
1. Thirty Thousand Dollars ($30,000.00) for credits claimed
pursuant to paragraph 1 or 2 of subsection B of this section for any
taxable year; or
2. Forty-five Thousand Dollars ($45,000.00) for credits claimed
pursuant to paragraph 3 or 4 of subsection B of this section for any
taxable year.
D. The credits authorized pursuant to the provisions of this
section shall not be used to red uce the income tax liability of the
taxpayer to less than zero (0).
E. To the extent not used the credits authorized by this
section may be carrie d over, in order, to each of the succeeding
five (5) tax years.
F. For the tax year beginning January 1, 2026, and each tax
year thereafter, the total amou nt of credits authorized by this
section used to offset tax sha ll be adjusted annually to limit the
annual amount of credits to Five Million Dollars ($5,000,000.00).
The Tax Commission shall annually calculate and publish by the first
day of the affected y ear a percentage by which the credits
authorized by this sectio n shall be reduced so the total amount of
credits used to offset tax does not exceed Five Million Doll ars
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($5,000,000.00) per year. The formula to be used for the percentage
adjustment shall be Five Million Dollars ($5,000,000.00) divided by
the credits claimed in the second preceding year.
G. In the event the total tax credits authorized by this
section exceed Five Million Dollars ($5,000,000.00) in any calendar
year, the Tax Commission shall p ermit any excess over Five Million
Dollars ($5,000,000.00) bu t shall factor such excess into the
percentage adjustment formula for subsequent years.
H. The provisions of this section shall cease to have the force
and effect of law on January 1, 20 29.
SECTION 2. NEW LAW A new section of law t o be codified
in the Oklahoma Statutes as Section 2357.232 of Title 68, unless
there is created a duplication in numberin g, reads as follows:
A. As used in this section:
1. "Child" means a person less than five (5) years of age;
2. "Licensed child care facility" means a person or entity
lawfully authorized to provide child care servic es within the state
and which is enrolled in Oklaho ma's Quality Rating and I mprovement
System (QRIS); and
3. "Qualified child care worker" means a person employed for at
least eight (8) consecutive months during the calendar year
corresponding to the income tax year for which the credit authorized
by this section is claimed and who performs classroom services for a
licensed child care facility and who is enrolled in Oklahoma 's
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Professional Development Ladder (PDL) and has earned a minimum of
twelve (12) credit hours.
B. For taxable years beginning January 1, 2024, and ending not
later than December 31, 2028, there shall be allowed a credit
against the tax imposed pursuant to Section 2355 of Title 68 of the
Oklahoma Statutes in the amount of Five Hundred Dollars ($500.00)
for a qualified child care worker.
C. The credit authorized by this section shall be refundable.
The credit shall first be applied to income tax liability , if any,
for the income tax year for which the credit is clai med and the
balance shall be refunded to the taxpayer.
D. For the tax year beginning January 1, 2026, and each tax
year thereafter, the total amount of credits authorized by this
section used to offset tax shall be adjuste d annually to limit the
annual amount of credits to Seven Million Dollars ($7,000,000.00).
The Tax Commission shall annually calculate and publish by the first
day of the affected year a percentage by which the credits
authorized by this section shall be r educed so the total amount of
credits used to offset tax does not exceed Seven Million Dollars
($7,000,000.00) per year. The formula to be used for the percentage
adjustment shall be Seven Million Dollars ($7,000,000.00) divided by
the credits claimed in t he second preceding year.
E. In the event the total tax credits authorized by this
section exceed Seven Million Dollars ($7,000,000.00) in any calendar
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year, the Tax Commission shall permit any excess over Seven Million
Dollars ($7,000,000.00) but shall fa ctor such excess into the
percentage adjustment formula for subsequent years.
F. The provisions of this section shall cease to have the force
and effect of law on January 1, 2029.
SECTION 3. This act shall become effective November 1, 2023.
59-1-8281 MKS 04/19/23