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Oklahoma Senate Bill SB1298

Oklahoma 2024 Regular Session

Oklahoma Senate Bill SB1298 Compare Versions

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5353 STATE OF OKLAHOMA
5454
5555 2nd Session of the 59th Legislature (2024)
5656
5757 SENATE BILL 1298 By: Rader
5858
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6363 AS INTRODUCED
6464
6565 An Act relating to income tax; amending 68 O.S. 2021,
6666 Section 2355, as last amended by Section 1, Chapter
6767 27, 1st Extraordinary Session, O.S.L. 2023 (68 O.S.
6868 Supp. 2023, Section 2355), which relates to tax
6969 imposed on classes of taxpayers; modifying income tax
7070 rate for certain tax years; amending 68 O.S. 2021,
7171 Section 2358, as last amended by Section 1, Chapter
7272 377, O.S.L. 2022 (68 O.S. Supp . 2023, Section 2358),
7373 which relates to adjustments; limiting certain
7474 personal exemption to certain tax years; modifying
7575 amount of standard deduction for certain tax years;
7676 updating statutory references; updating statutory
7777 language; providing an effective date; and declaring
7878 an emergency.
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8383 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
8484 SECTION 1. AMENDATORY 68 O.S. 2021, Section 2355, as
8585 last amended by Section 1, Chapter 27, 1st Extraordinary Session,
8686 O.S.L. 2023 (68 O.S. Supp. 2023, Section 2355), is amended to read
8787 as follows:
8888 Section 2355. A. Individuals. For all ta xable years beginning
8989 after December 31, 1998, and before January 1, 2006, a tax is hereby
9090 imposed upon the Oklahoma taxable income of every resi dent or
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142142 nonresident individual, whi ch tax shall be computed at the option of
143143 the taxpayer under one of the two following methods:
144144 1. METHOD 1.
145145 a. Single individuals and married individuals filing
146146 separately not deducting federal income tax:
147147 (1) 1/2% tax on first $1,000.00 or part thereof,
148148 (2) 1% tax on next $1,500.00 or p art thereof,
149149 (3) 2% tax on next $1,250.00 o r part thereof,
150150 (4) 3% tax on next $1,150.00 or part thereof,
151151 (5) 4% tax on next $1,300.00 or part thereof,
152152 (6) 5% tax on next $1,500.00 or part thereof,
153153 (7) 6% tax on next $2,300. 00 or part thereof, and
154154 (8) (a) for taxable years beginning after December
155155 31, 1998, and before January 1, 2002, 6.75%
156156 tax on the remainder,
157157 (b) for taxable years beginning on or after
158158 January 1, 2002, and before January 1, 2004,
159159 7% tax on the remainder, and
160160 (c) for taxable years beginnin g on or after
161161 January 1, 2004, 6.65% tax on the remainder.
162162 b. Married individuals filing jointly and surviving
163163 spouse to the extent and in the manner that a
164164 surviving spouse is permitted t o file a joint return
165165 under the provisions of the Internal Revenue Code and
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217217 heads of households as defined in the Internal Revenue
218218 Code not deducting federal income tax:
219219 (1) 1/2% tax on first $2,000.00 or part thereof,
220220 (2) 1% tax on next $3,000.00 or part thereof,
221221 (3) 2% tax on next $2,500.00 or part thereof,
222222 (4) 3% tax on next $2,300.00 or part thereof,
223223 (5) 4% tax on next $2,400.00 or part thereof,
224224 (6) 5% tax on next $2,800.00 or part thereof,
225225 (7) 6% tax on next $6,000.00 or part thereof, and
226226 (8) (a) for taxable years beginning after Decemb er
227227 31, 1998, and before January 1, 2002, 6.75%
228228 tax on the remainder,
229229 (b) for taxable years beginning on or after
230230 January 1, 2002, and before January 1, 2004,
231231 7% tax on the remainder, and
232232 (c) for taxable years beginning on or after
233233 January 1, 2004, 6.65% tax on the remainder.
234234 2. METHOD 2.
235235 a. Single individuals and married individuals filing
236236 separately deducting federal income tax:
237237 (1) 1/2% tax on first $1,000.00 or part thereof,
238238 (2) 1% tax on next $1,500.00 or part thereof ,
239239 (3) 2% tax on next $1,250.00 or p art thereof,
240240 (4) 3% tax on next $1,150.00 or part thereof,
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292292 (5) 4% tax on next $1,200.00 or part thereof,
293293 (6) 5% tax on next $1,400.00 or part thereof,
294294 (7) 6% tax on next $1,500.00 or part thereof,
295295 (8) 7% tax on next $1,50 0.00 or part thereof,
296296 (9) 8% tax on next $2,000.00 or part thereof,
297297 (10) 9% tax on next $3,500.00 or part there of, and
298298 (11) 10% tax on the remainder.
299299 b. Married individuals filing jointly and surviving
300300 spouse to the extent and in the manner that a
301301 surviving spouse is permitted to file a joi nt return
302302 under the provisions of the Internal Revenue Code and
303303 heads of households as defined in the Internal Revenue
304304 Code deducting federal income tax:
305305 (1) 1/2% tax on the first $2,000.00 or part thereof,
306306 (2) 1% tax on the next $3,000.00 or part thereof,
307307 (3) 2% tax on the next $2,500.00 or part thereof,
308308 (4) 3% tax on the next $1 ,400.00 or part thereof,
309309 (5) 4% tax on the next $1,500.00 or part thereof,
310310 (6) 5% tax on the next $1,600.00 or part thereof,
311311 (7) 6% tax on the next $1,250.00 or part thereof,
312312 (8) 7% tax on the next $1,750.00 or part thereof,
313313 (9) 8% tax on the next $3,000.00 or part thereof,
314314 (10) 9% tax on the next $6,000.00 or part thereof, and
315315 (11) 10% tax on the remainder.
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367367 B. Individuals. For all taxable years beginning on or after
368368 January 1, 2008, and ending any tax year which begins after December
369369 31, 2015, for which the determination required pursuant to Sections
370370 4 2355.1F and 5 Section 2355.1G of this act title is made by the
371371 State Board of Equalization, a t ax is hereby imposed upon the
372372 Oklahoma taxable income of every resident or nonresident individual,
373373 which tax shall be computed as follows:
374374 1. Single individuals and married individuals filing
375375 separately:
376376 (a) 1/2% tax on first $1,000.00 or part thereof,
377377 (b) 1% tax on next $1,500.00 or part thereof,
378378 (c) 2% tax on next $1,250.00 or par t thereof,
379379 (d) 3% tax on next $1,150.00 or part thereof,
380380 (e) 4% tax on next $2,300.00 or part thereof,
381381 (f) 5% tax on next $1,500.0 0 or part thereof,
382382 (g) 5.50% tax on the remaind er for the 2008 tax year and
383383 any subsequent tax year unless the rate prescribed by
384384 subparagraph (h) of this paragraph is in effect, and
385385 (h) 5.25% tax on the remainder for the 2009 and subsequent
386386 tax years. The decrease in the top marginal
387387 individual income tax rate otherwise authorized by
388388 this subparagraph shall be contingent upon t he
389389 determination required to be made by the State Board
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441441 of Equalization pursuant to Section 23 55.1A of this
442442 title.
443443 2. Married individuals filing jointly and surviving spouse to
444444 the extent and in the manner that a surviving spouse is permitted to
445445 file a joint return under the provisions of the Internal Revenue
446446 Code and heads of households as defined in the Internal Revenue
447447 Code:
448448 (a) 1/2% tax on first $2,000.00 or part thereof,
449449 (b) 1% tax on next $3,000.00 or part thereof,
450450 (c) 2% tax on next $2,500.00 or par t thereof,
451451 (d) 3% tax on next $2,300.00 or part thereof,
452452 (e) 4% tax on next $2,400.00 or part thereof,
453453 (f) 5% tax on next $2,800.0 0 or part thereof,
454454 (g) 5.50% tax on the remaind er for the 2008 tax year and
455455 any subsequent tax year unless the rate prescribed by
456456 subparagraph (h) of this paragraph is in effect, and
457457 (h) 5.25% tax on the remainder for the 2009 and subsequent
458458 tax years. The decrease in the top marginal
459459 individual income tax rate otherwise authorized by
460460 this subparagraph shall be contingent upon t he
461461 determination required to be made by the State Board
462462 of Equalization pursuant to Section 23 55.1A of this
463463 title.
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515515 C. Individuals. For all taxable years beginning on or after
516516 January 1, 2024, a tax is hereby imposed upon the Oklaho ma taxable
517517 income of every resident or nonresident individual, which tax shall
518518 be computed as follows:
519519 1. Single individuals and married individuals filing
520520 separately:
521521 (a) 0.25% tax on first $1,000.00 or part thereof,
522522 (b) 0.75% tax on next $1,500.00 or part thereof,
523523 (c) 1.75% tax on next $1,250.00 or part thereof,
524524 (d) 2.75% tax on next $1,150.00 or part thereof,
525525 (e) 3.75% tax on next $2,300.00 or part thereof,
526526 (f) 4.75% tax on the remainder.
527527 2. Married individuals filing jointly and surviving spouse to
528528 the extent and in the manner that a surviving spouse is permit ted to
529529 file a joint return under the provisions of the Int ernal Revenue
530530 Code and heads of households as defined in the Internal Revenue
531531 Code:
532532 (a) 0.25% tax on first $2,000.00 or part thereof,
533533 (b) 0.75% tax on next $3,000.00 or part thereof,
534534 (c) 1.75% tax on next $2,500.00 or part thereof,
535535 (d) 2.75% tax on next $2,300.00 or part thereof,
536536 (e) 3.75% tax on next $4,600.00 or part thereof,
537537 (f) 4.75% tax on the remainder four and fifty hundredths
538538 percent (4.50%).
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590590 No deduction for federal income taxes paid shall be allowed to
591591 any taxpayer to arrive at taxable income.
592592 D. Nonresident aliens. In lieu of the rates set forth in
593593 subsection A above, there shall be imposed on nonresident aliens, as
594594 defined in the Internal Revenue Code , a tax of eight percent (8%)
595595 instead of thirty percent (30%) as used in the Internal Revenue
596596 Code, with respect to the Oklahoma taxable income of such
597597 nonresident aliens as det ermined under the provision of t he Oklahoma
598598 Income Tax Act.
599599 Every payer of amounts covered by this subsection shall deduct
600600 and withhold from such amounts paid each payee an amount equal to
601601 eight percent (8%) thereof. Every payer required to deduct and
602602 withhold taxes under this subsection shall for each quarterly period
603603 on or before the last day of the month following the close of each
604604 such quarterly period, pay over the amount so withheld as taxes to
605605 the Oklahoma Tax Commission, and shall file a return wit h each such
606606 payment. Such return sh all be in such form as t he Tax Commission
607607 shall prescribe. Every payer required under this subsection to
608608 deduct and withhold a tax from a payee shall, as to the total
609609 amounts paid to each payee during the calend ar year, furnish to such
610610 payee, on or before January 31 , of the succeeding year, a writ ten
611611 statement showing the name of the payer, the name of the payee and
612612 the payee’s Social Security account number, if any, the total amount
613613 paid subject to taxation, and the tot al amount deducted and withheld
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665665 as tax and such other inform ation as the Tax Commission may require.
666666 Any payer who fails to withhold or pay to the Tax Commission any
667667 sums herein required to be withheld or paid shall be personally and
668668 individually liable therefor to the State of Oklahoma this state.
669669 E. Corporations. For all taxable years beginning after
670670 December 31, 2021, a tax is hereby imposed upon the Oklaho ma taxable
671671 income of every corporation doing busi ness within this state or
672672 deriving income from sources within this state in an amou nt equal to
673673 four percent (4%) thereof.
674674 There shall be no additional Oklahoma income tax imposed on
675675 accumulated taxable income or on undistributed personal holding
676676 company income as those terms are defined in the Internal Revenue
677677 Code.
678678 F. Certain foreign corporations. In lieu of the tax imposed in
679679 the first paragraph of subsection D of this section, for all taxable
680680 years beginning after December 31, 2021, there shall be imposed on
681681 foreign corporations, as defined in the Internal Revenue Code, a tax
682682 of four percent (4%) instead of thirty percent (30%) as used in the
683683 Internal Revenue Code, where such income is received from sources
684684 within Oklahoma this state, in accordance with the provisions of the
685685 Internal Revenue Code an d the Oklahoma Income Tax Act.
686686 Every payer of amounts covered by this subsectio n shall deduct
687687 and withhold from such amounts paid each payee an amount equal to
688688 four percent (4%) thereof. Every payer requ ired to deduct and
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740740 withhold taxes under this subsect ion shall for each quarterly period
741741 on or before the last day of the month following the close of each
742742 such quarterly period, pay over the amount so withheld as taxes to
743743 the Tax Commission, and shall file a return with each such payment.
744744 Such return shall be in such form as the Tax Com mission shall
745745 prescribe. Every payer required u nder this subsection to deduct and
746746 withhold a tax from a payee shall, as to the t otal amounts paid to
747747 each payee during the c alendar year, furnish to such payee, on or
748748 before January 31, of the succeeding year, a written statement
749749 showing the name of the payer, the name of the payee and the payee ’s
750750 Social Security account number, if any, the total amounts paid
751751 subject to taxation, the total amount deducted and withheld as tax
752752 and such other information as the Tax Commission may require. Any
753753 payer who fails to withhold or pay to the Tax Commis sion any sums
754754 herein required to be withheld or paid shall be personally and
755755 individually liable therefor to the State of Oklahoma .
756756 G. Fiduciaries. A tax is hereby imposed up on the Oklahoma
757757 taxable income of every trust and estate at the same rates as are
758758 provided in subsection B or C of this section for single
759759 individuals. Fiduciaries are not allowed a deduction for any
760760 federal income tax paid.
761761 H. Tax rate tables. For all taxable years beginning after
762762 December 31, 1991, in lieu of the tax imposed by subsection A, B or
763763 C of this section, as applicable there is hereby imposed for each
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815815 taxable year on the taxabl e income of every individual, whose
816816 taxable income for such taxabl e year does not exceed the ceiling
817817 amount, a tax determined under tables, applicable to such taxable
818818 year which shall be prescribed by the Tax Commission and which shall
819819 be in such form as it determines appropriate. In the table so
820820 prescribed, the amounts of the tax shall be computed on the basis of
821821 the rates prescribed by subsection A, B or C of this section. For
822822 purposes of this subsection, the term “ceiling amount” means, with
823823 respect to any taxpayer, the amount dete rmined by the Tax Commission
824824 for the tax rate category in which such taxpayer falls.
825825 SECTION 2. AMENDATORY 68 O.S. 2021, Section 2358, as
826826 last amended by Section 1, Chapter 377, O.S.L. 2022 (68 O.S. Supp.
827827 2023, Section 2358), is a mended to read as follows:
828828 Section 2358. For all tax years beginnin g after December 31,
829829 1981, taxable income and adjusted gross income shall be adjusted to
830830 arrive at Oklahoma taxable income and Oklahoma adjusted gross income
831831 as required by this section.
832832 A. The taxable income of any t axpayer shall be adjusted to
833833 arrive at Oklahoma taxable income for corporations and Oklahoma
834834 adjusted gross income for individuals, as foll ows:
835835 1. There shall be added interest income on obligations of any
836836 state or political subdivision thereto which i s not otherwise
837837 exempted pursuant to othe r laws of this state, to the extent that
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889889 such interest is not included in taxable income and adjusted gross
890890 income.
891891 2. There shall be deducted amounts included in such inco me that
892892 the state is prohibited from taxing b ecause of the provisions of the
893893 Federal Constitution, the State Constitution, federal laws or laws
894894 of Oklahoma.
895895 3. The amount of any feder al net operating loss deduction shall
896896 be adjusted as follows:
897897 a. For carryovers and car rybacks to taxable years
898898 beginning before January 1, 1981, the amoun t of any
899899 net operating loss deduction allowed to a taxpayer for
900900 federal income tax purposes shall be reduced to an
901901 amount which is the same portion thereof as the loss
902902 from sources within this state, as determined purs uant
903903 to this section and Section 2362 of this ti tle, for
904904 the taxable year in which such loss is sustained is of
905905 the total loss for such yea r;
906906 b. For carryovers and carrybacks to taxable years
907907 beginning after December 31, 1980, the amount of any
908908 net operating loss deduction allowed for the taxa ble
909909 year shall be an amount equal to the aggregate of the
910910 Oklahoma net operating loss carryovers and carrybacks
911911 to such year. Oklahoma net operating losses shall be
912912 separately determined by reference to Section 172 of
913913
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964964 the Internal Revenue Code, 26 U.S.C., Section 1 72, as
965965 modified by the Oklahoma Income Tax Act, Section 2351
966966 et seq. of this title, and shall be allowed without
967967 regard to the existence of a federal net operating
968968 loss. For tax years beginning after Dece mber 31,
969969 2000, and ending before January 1, 2008, the years to
970970 which such losses may be carried shall be determined
971971 solely by reference to Section 172 of the Internal
972972 Revenue Code, 26 U.S.C., Section 172, with the
973973 exception that the terms “net operating loss” and
974974 “taxable income” shall be replaced with “Oklahoma net
975975 operating loss” and “Oklahoma taxable income ”. For
976976 tax years beginning after Decem ber 31, 2007, and
977977 ending before January 1, 2009, years to which such
978978 losses may be carried back shall be limited to two (2)
979979 years. For tax years beginn ing after December 31,
980980 2008, the years to which such losses may be carried
981981 back shall be determined solely by reference to
982982 Section 172 of the Internal Revenue Code, 26 U.S.C .,
983983 Section 172, with the exception that the t erms “net
984984 operating loss” and “taxable income” shall be replaced
985985 with “Oklahoma net operating loss ” and “Oklahoma
986986 taxable income”.
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10381038 4. Items of the following nature shall be allocated as
10391039 indicated. Allowable deductions attrib utable to items separately
10401040 allocable in subparagraphs a, b and c of this paragraph, whether or
10411041 not such items of income were actually received, shall be allocated
10421042 on the same basis as those items:
10431043 a. Income from real and tangible personal pr operty, such
10441044 as rents, oil and mining product ion or royalties, and
10451045 gains or losses from sales of such property, shall be
10461046 allocated in accordance with the situs of such
10471047 property;
10481048 b. Income from intangible personal property, such as
10491049 interest, dividends, patent or copyright royalties,
10501050 and gains or losses from sales of such property, shall
10511051 be allocated in accordance with the domiciliary situs
10521052 of the taxpayer, except that:
10531053 (1) where such property has acquired a nonunitary
10541054 business or commercial situs apart from the
10551055 domicile of the taxpayer such income shal l be
10561056 allocated in accordance with such business or
10571057 commercial situs; interest income from
10581058 investments held to generate working ca pital for
10591059 a unitary business enterprise shall be included
10601060 in apportionable income; a resident tru st or
10611061 resident estate shall be treated as having a
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11131113 separate commercial or business situs insofar as
11141114 undistributed income is concerned, but shall not
11151115 be treated as having a separate commercial or
11161116 business situs insofar as distributed income i s
11171117 concerned,
11181118 (2) for taxable years beginning after December 31,
11191119 2003, capital or ordinary gai ns or losses from
11201120 the sale of an ownership interest in a publicly
11211121 traded partnership, as defined by Section 7704(b)
11221122 of the Internal Revenue Code, shall be allocated
11231123 to this state in the ratio of the original cost
11241124 of such partnership’s tangible property in this
11251125 state to the original cost of such partnership ’s
11261126 tangible property everywhere, as determined at
11271127 the time of the sale; if more than fifty percent
11281128 (50%) of the value of the partnership’s assets
11291129 consists of intangible assets, capital or
11301130 ordinary gains or losses from the sale of an
11311131 ownership interest in the partnership shall be
11321132 allocated to this state in accordance with the
11331133 sales factor of the partnership for its first
11341134 full tax period immediately preceding its tax
11351135 period during which the ownershi p interest in the
11361136 partnership was sold; the provisions of this
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11881188 division shall only apply if the capital or
11891189 ordinary gains or losses from the sale of an
11901190 ownership interest in a partnership do not
11911191 constitute qualifying g ain receiving capital
11921192 treatment as defined in su bparagraph a of
11931193 paragraph 2 of subsection F of this section,
11941194 (3) income from such pro perty which is required to be
11951195 allocated pursuant to the provisions of paragraph
11961196 5 of this subsection shall be allocated as herein
11971197 provided;
11981198 c. Net income or loss from a business activity which is
11991199 not a part of business carried on within or without
12001200 the state of a unitary character sh all be separately
12011201 allocated to the state in which s uch activity is
12021202 conducted;
12031203 d. In the case of a manufacturing or processing
12041204 enterprise the business of which in Oklahoma this
12051205 state consists solely of marketing its products by:
12061206 (1) sales having a situs without this state, shipped
12071207 directly to a point from without the stat e to a
12081208 purchaser within the state, commonly known as
12091209 interstate sales,
12101210 (2) sales of the product stored in public warehouses
12111211 within the state pursuant to “in transit”
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12631263 tariffs, as prescribed and allowed by the
12641264 Interstate Commerce Commission, t o a purchaser
12651265 within the state,
12661266 (3) sales of the product stored in public warehouses
12671267 within the state where the shipment to such
12681268 warehouses is not covered by “in transit”
12691269 tariffs, as prescribed and allowed by the
12701270 Interstate Commerce Commission, to a purchaser
12711271 within or without the state,
12721272 the Oklahoma net income shall, at the option of the
12731273 taxpayer, be that portion of the total net income of
12741274 the taxpayer for federal income tax purposes derived
12751275 from the manufacture and/or processing and sales
12761276 everywhere as determined by the ratio of the sales
12771277 defined in this section made to the purchaser within
12781278 the state to the total sales everywhere. T he term
12791279 “public warehouse” as used in this subparagraph means
12801280 a licensed public warehouse, the principal business of
12811281 which is warehousing me rchandise for the public;
12821282 e. In the case of insurance companies, Oklahoma taxab le
12831283 income shall be taxable income of the taxpayer for
12841284 federal tax purposes, as adjusted for the adjustments
12851285 provided pursuant to the provisions of paragraphs 1
12861286 and 2 of this subsection, apportioned as follows:
12871287
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13381338 (1) except as otherwise provided by division (2) of
13391339 this subparagraph, taxable inco me of an insurance
13401340 company for a taxable year shall be apportioned
13411341 to this state by multiplying such income by a
13421342 fraction, the numerator of which is the direct
13431343 premiums written for insurance on property or
13441344 risks in this state, and the denominator of which
13451345 is the direct premiums written for insurance on
13461346 property or risks everywhere. For purposes of
13471347 this subsection, the term “direct premiums
13481348 written” means the total amount of direct
13491349 premiums written, assessments and annuity
13501350 considerations as reported for the taxable year
13511351 on the annual statement filed by the company with
13521352 the Insurance Commissioner in the form approved
13531353 by the National Association of Insurance
13541354 Commissioners, or such other form as may be
13551355 prescribed in lieu the reof,
13561356 (2) if the principal source of premiums written by an
13571357 insurance company consists of premiums for
13581358 reinsurance accepted by it, the taxable income of
13591359 such company shall be apportioned to this state
13601360 by multiplying such income by a fraction, the
13611361 numerator of which is the sum of (a) direct
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14131413 premiums written for insurance on property or
14141414 risks in this state, plus (b) premiums written
14151415 for reinsurance accepted in respect of property
14161416 or risks in this state, and the denominator of
14171417 which is the sum of (c) direct pr emiums written
14181418 for insurance on property or risks everywhere,
14191419 plus (d) premiums written for reinsurance
14201420 accepted in respect of property or risks
14211421 everywhere. For purposes of this paragraph,
14221422 premiums written for reinsurance accepted in
14231423 respect of property or risks in this state,
14241424 whether or not otherwise determinable, may at the
14251425 election of the company be determined on the
14261426 basis of the proportion which premiums written
14271427 for insurance accepted from companies
14281428 commercially domiciled in Oklahoma this state
14291429 bears to premiums written for reinsurance
14301430 accepted from all sources, or alternatively in
14311431 the proportion which the sum of the direct
14321432 premiums written for insurance on pro perty or
14331433 risks in this state by each ceding compa ny from
14341434 which reinsurance is accepted bears to the sum of
14351435 the total direct premiums written by each such
14361436 ceding company for the taxable year.
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14881488 5. The net income or loss remaining after the separate
14891489 allocation in paragraph 4 of this subsection, being that which is
14901490 derived from a unitary busines s enterprise, shall be apportioned to
14911491 this state on the basis of the arithmetical average of three factors
14921492 consisting of property, payroll and sales or gross revenue
14931493 enumerated as subparagraphs a, b and c of this parag raph. Net
14941494 income or loss as used in this paragraph includes that derived from
14951495 patent or copyright royalties, purchase discounts, and interest on
14961496 accounts receivable relating to or arising from a business activity,
14971497 the income from which is apportioned pursuant to this subsection,
14981498 including the sale or other disposition of such property and any
14991499 other property used in the unitary enterprise. Deductions used in
15001500 computing such net income or loss shall not includ e taxes based on
15011501 or measured by income. Provided , for corporations whose property
15021502 for purposes of the tax imposed by Section 2355 of this title has an
15031503 initial investment cost equaling or exc eeding Two Hundred Million
15041504 Dollars ($200,000,000.00) and such investment is made on or after
15051505 July 1, 1997, or for corporations which expand their proper ty or
15061506 facilities in this state and such expansion has an investment cost
15071507 equaling or exceeding Two Hundred Million Dollars ($200,000,000.00)
15081508 over a period not to exceed three (3) years, and such expansion is
15091509 commenced on or after January 1, 2000, the three factors shall be
15101510 apportioned with property and payroll, each comprising twenty -five
15111511 percent (25%) of the apportionment factor and sales comprising fifty
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15631563 percent (50%) of the apportion ment factor. The apportionment
15641564 factors shall be computed as follows:
15651565 a. The property factor is a fraction, the numerator of
15661566 which is the average value of the taxpayer ’s real and
15671567 tangible personal property owned or rented and used in
15681568 this state during the tax period and the denominator
15691569 of which is the average value of all the taxpayer ’s
15701570 real and tangible personal property everywhere owned
15711571 or rented and used during the tax period.
15721572 (1) Property, the income from which is separately
15731573 allocated in paragraph 4 of this subsection,
15741574 shall not be included in determining this
15751575 fraction. The numerator of the fraction shall
15761576 include a portion of the investment in
15771577 transportation and other equipment having no
15781578 fixed situs, such as rolling stock, buses, trucks
15791579 and trailers, including machinery and equipment
15801580 carried thereon, airplanes, salespersons ’
15811581 automobiles and other simi lar equipment, in the
15821582 proportion that miles traveled in Oklahoma this
15831583 state by such equipment bears to total miles
15841584 traveled,
15851585 (2) Property owned by the taxpa yer is valued at its
15861586 original cost. Property rented by the taxpayer
15871587
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16381638 is valued at eight times the net annual rental
16391639 rate. Net annual rental rate is the annual
16401640 rental rate paid by the taxpayer, less any annual
16411641 rental rate received by the tax payer from
16421642 subrentals,
16431643 (3) The average value of pro perty shall be determined
16441644 by averaging the values at the beginning and
16451645 ending of the tax period but the Oklahoma Tax
16461646 Commission may require the averaging of monthly
16471647 values during the tax period if reasonably
16481648 required to reflect properly the average value of
16491649 the taxpayer’s property;
16501650 b. The payroll factor is a fraction, t he numerator of
16511651 which is the total compensation for services rendered
16521652 in the state during the tax period, and the
16531653 denominator of which is th e total compensation for
16541654 services rendered everywhe re during the tax period.
16551655 “Compensation”, as used in this subsection , means
16561656 those paid-for services to the exten t related to the
16571657 unitary business but does not include officers ’
16581658 salaries, wages and other compensation.
16591659 (1) In the case of a transportation enterprise, the
16601660 numerator of the fraction sha ll include a portion
16611661 of such expenditure in connection with employees
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17131713 operating equipment over a fixed route, such as
17141714 railroad employees, airline pilots, or bus
17151715 drivers, in this state only a part of the time,
17161716 in the proportion that mileage traveled in
17171717 Oklahoma this state bears to total mileage
17181718 traveled by such employees,
17191719 (2) In any case the numerator of the fraction shall
17201720 include a portion of such expenditures in
17211721 connection with itinerant employees, such as
17221722 traveling salespersons, in this state only a part
17231723 of the time, in the proportion tha t time spent in
17241724 Oklahoma this state bears to total time spent in
17251725 furtherance of the enterprise by such employees;
17261726 c. The sales factor is a frac tion, the numerator of which
17271727 is the total sales or gross revenue of the taxpayer in
17281728 this state during the tax period, and the denomina tor
17291729 of which is the total sales or gross revenue of the
17301730 taxpayer everywhere dur ing the tax period. “Sales”,
17311731 as used in this subsection, does not include sales or
17321732 gross revenue which are separately all ocated in
17331733 paragraph 4 of this subsection.
17341734 (1) Sales of tangible persona l property have a situs
17351735 in this state if the property is delivered or
17361736 shipped to a purchaser other than th e United
17371737
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17881788 States government, within t his state regardless
17891789 of the FOB point or other conditions of the sale;
17901790 or the property is shipped f rom an office, store,
17911791 warehouse, factory or other place of storage in
17921792 this state and (a) the purchaser is the United
17931793 States government or (b) the taxpayer is not
17941794 doing business in the state of the des tination of
17951795 the shipment.
17961796 (2) In the case of a railroad or interurban r ailway
17971797 enterprise, the numerator of the fraction shall
17981798 not be less than the allocation of revenues to
17991799 this state as shown in its annual report to the
18001800 Corporation Commission.
18011801 (3) In the case of an airline, truck or bus
18021802 enterprise or freight c ar, tank car, refrigerator
18031803 car or other railroad equipment enterprise, the
18041804 numerator of the fraction shall include a portion
18051805 of revenue from interstate transportation in the
18061806 proportion that interstate mileage traveled in
18071807 Oklahoma this state bears to total interstate
18081808 mileage traveled.
18091809 (4) In the case of an oil, gasoline or gas pipeline
18101810 enterprise, the numerator of the fractio n shall
18111811 be either the total of traff ic units of the
18121812
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18631863 enterprise within Oklahoma this state or the
18641864 revenue allocated to Oklahoma this state based
18651865 upon miles moved, at the option of the taxpayer,
18661866 and the denominator of which shall be the total
18671867 of traffic units of the enterprise or the revenue
18681868 of the enterprise everywhere as appropriate to
18691869 the numerator. A “traffic unit” is hereby
18701870 defined as the transportation for a distance of
18711871 one (1) mile of one (1) barrel of oil, one (1)
18721872 gallon of gasoline or one thousand ( 1,000) cubic
18731873 feet of natural or casi nghead gas, as the case
18741874 may be.
18751875 (5) In the case of a telephone or telegraph or other
18761876 communication enterprise, the numerator of the
18771877 fraction shall include that portion of the
18781878 interstate revenue as is allocated pursuant t o
18791879 the accounting procedures prescribed by the
18801880 Federal Communications Commission ; provided that
18811881 in respect to each corporation or business entity
18821882 required by the Federal Communications Commission
18831883 to keep its books and records in accordance with
18841884 a uniform system of accounts prescribed by such
18851885 Commission, the intrastate net income shall be
18861886 determined separately in the manner provided by
18871887
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19381938 such uniform system of accounts and o nly the
19391939 interstate income shall be subject to allocation
19401940 pursuant to the provisions of t his subsection.
19411941 Provided further, that the gross revenue factors
19421942 shall be those as are determined pursuant to the
19431943 accounting procedures prescribed by the Fed eral
19441944 Communications Commission.
19451945 In any case where the apportionment of the three factors
19461946 prescribed in this paragraph attributes to Oklahoma this state a
19471947 portion of net income of the enterprise out of all approp riate
19481948 proportion to the property owned and/or business transacted within
19491949 this state, because of the fact that one or more of the factors so
19501950 prescribed are not employed to any appreciable extent in furtherance
19511951 of the enterprise; or because one or more factor s not so prescribed
19521952 are employed to a considerable exte nt in furtherance of the
19531953 enterprise; or because of other reasons, the Tax Commission is
19541954 empowered to permit, after a showin g by taxpayer that an excessive
19551955 portion of net income has been attributed to Oklahoma this state, or
19561956 require, when in its judgment an insufficient portion of net income
19571957 has been attributed to Oklahoma this state, the elimination,
19581958 substitution, or use of additional factors, or reduction or increase
19591959 in the weight of such prescribed fa ctors. Provided, however, that
19601960 any such variance from such prescribed factor s which has the effect
19611961 of increasing the portion of net income at tributable to Oklahoma
19621962
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20132013 this state must not be inherently arbitrary, and application of the
20142014 recomputed final apportionment to the net income of the enterprise
20152015 must attribute to Oklahoma this state only a reasonable portion
20162016 thereof.
20172017 6. For calendar years 19 97 and 1998, the owner of a new or
20182018 expanded agricultural commodity processing f acility in this state
20192019 may exclude from Oklahoma taxable income, or in the case of an
20202020 individual, the Oklahoma adjusted gross income, f ifteen percent
20212021 (15%) of the investment by t he owner in the new or expanded
20222022 agricultural commodity processing facility. For calendar year 1999,
20232023 and all subsequent years, the percentage, not to exceed fifteen
20242024 percent (15%), available to the owner of a new or expanded
20252025 agricultural commodity processin g facility in this state claiming
20262026 the exemption shall be adjusted annually so t hat the total estimated
20272027 reduction in tax liability does not exceed One Million Dollars
20282028 ($1,000,000.00) annually. The Tax Commission s hall promulgate rules
20292029 for determining the p ercentage of the investment which ea ch eligible
20302030 taxpayer may exclude. The exclusion provided by this paragraph
20312031 shall be taken in the taxable year when the i nvestment is made. In
20322032 the event the total reduction in tax liabil ity authorized by this
20332033 paragraph exceeds One Million Dollars ($1,000,000.00) in any
20342034 calendar year, the Tax Commi ssion shall permit any excess over One
20352035 Million Dollars ($1,000,000.00) and shall factor such excess into
20362036 the percentage for subsequent years. Any amount of the exemption
20372037
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20882088 permitted to be excluded pursuant to the p rovisions of this
20892089 paragraph but not used in any year may be carried forward as an
20902090 exemption from income pursuant to the p rovisions of this paragraph
20912091 for a period not exceeding six (6) yea rs following the year in which
20922092 the investment was originally made.
20932093 For purposes of this paragraph:
20942094 a. “Agricultural commodity processing facility ” means
20952095 building buildings, structures, fixtures and
20962096 improvements used or operated primarily for the
20972097 processing or production of marketable prod ucts from
20982098 agricultural commodities. The term shall also mean a
20992099 dairy operation that requires a depreciable investment
21002100 of at least Two Hundred Fifty Thousand Dollars
21012101 ($250,000.00) and which produces milk from dairy cows.
21022102 The term does not include a facili ty that provides
21032103 only, and nothing more than, storage, cleaning, drying
21042104 or transportation of agricultural commodi ties, and
21052105 b. “Facility” means each part of the facility which is
21062106 used in a process primarily for:
21072107 (1) the processing of agricultural commoditie s,
21082108 including receiving or storing ag ricultural
21092109 commodities, or the production of milk at a dairy
21102110 operation,
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21622162 (2) transporting the agricultural commodities or
21632163 product before, during or after the processing,
21642164 or
21652165 (3) packaging or otherwis e preparing the product for
21662166 sale or shipment.
21672167 7. Despite any provision to the contrary in paragraph 3 of this
21682168 subsection, for taxable years beginning after De cember 31, 1999, in
21692169 the case of a taxpayer which has a farming loss, such farming loss
21702170 shall be considered a net operati ng loss carryback in accordance
21712171 with and to the extent of the Internal Revenue Code, 26 U.S.C.,
21722172 Section 172(b)(G). However, the amount of the net operating loss
21732173 carryback shall not exceed the lesser of:
21742174 a. Sixty Thousand Dollars ($6 0,000.00), or
21752175 b. the loss properly shown on Schedule F of the Internal
21762176 Revenue Service Form 1040 reduc ed by one-half (1/2) of
21772177 the income from all other sources other than reflected
21782178 on Schedule F.
21792179 8. In taxable years beginning after December 31, 1995, all
21802180 qualified wages equal t o the federal income tax credit set forth in
21812181 26 U.S.C.A., Section 45A, shall be deducted from taxable income.
21822182 The deduction allowed pursuant to this paragraph shall o nly be
21832183 permitted for the tax years in which the federal tax credit pursuant
21842184 to 26 U.S.C.A., Section 45A, is allowed. For purposes of this
21852185
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22362236 paragraph, “qualified wages” means those wages used to calculate the
22372237 federal credit pursuant to 26 U.S.C.A., Section 45A.
22382238 9. In taxable years beginning after December 31, 2 005, an
22392239 employer that is eligible for and utilizes the Safety Pays OS HA
22402240 Consultation Service provided by the Oklahoma Department of Labor
22412241 shall receive an exemption from taxable income in the amount o f One
22422242 Thousand Dollars ($1,000.00) for the tax year that the servi ce is
22432243 utilized.
22442244 10. For taxable years beginning on or after January 1, 2010,
22452245 there shall be added to Oklahoma taxable income an amount equal to
22462246 the amount of deferred income not included in such taxable income
22472247 pursuant to Section 108(i)(1) of th e Internal Revenue Code of 1986
22482248 as amended by Section 1231 of the Ame rican Recovery and Reinvestment
22492249 Act of 2009 (P.L. No. 111 -5). There shall be subtracted from
22502250 Oklahoma taxable income an amount equ al to the amount of deferred
22512251 income included in such taxable incom e pursuant to Section 108(i)(1)
22522252 of the Internal Revenue Code by Section 1231 of the American
22532253 Recovery and Reinvestment Act of 2009 (P.L. No. 111 -5).
22542254 11. For taxable years beginning on or after January 1, 2019,
22552255 there shall be subtracted from Okla homa taxable income or adjusted
22562256 gross income any item of income or ga in, and there shall be added to
22572257 Oklahoma taxable income or adjusted gross income any item of loss or
22582258 deduction that in the absence of an election pursuant to the
22592259 provisions of the Pass -Through Entity Tax Equity Act of 20 19 would
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23112311 be allocated to a member or to an indirect member of an electing
23122312 pass-through entity pursuant to Section 2351 et seq. of this title,
23132313 if (i) the electing pass -through entity has accounted for such item
23142314 in computing its Oklahoma net entity income or loss pursuant to the
23152315 provisions of the Pass-Through Entity Tax Equity Act of 2019, and
23162316 (ii) the total amount of tax attributable to any resulting Oklahoma
23172317 net entity income has been paid. The Oklahoma Tax Commission shall
23182318 promulgate rules for the reporti ng of such exclusion to direct and
23192319 indirect members of the electing pass -through entity. As used in
23202320 this paragraph, “electing pass-through entity”, “indirect member”,
23212321 and “member” shall be defined in the same manner as pre scribed by
23222322 Section 2355.1P-2 of this title. Notwithstanding the appl ication of
23232323 this paragraph, the adjusted tax basis of any ownership interest in
23242324 a pass-through entity for purposes of Section 2351 e t seq. of this
23252325 title shall be equal to its adjusted tax basis for federal income
23262326 tax purposes.
23272327 B. 1. The taxable income of any corporation shall be further
23282328 adjusted to arrive at Oklahoma taxable income, except those
23292329 corporations electing treatment as provided in subc hapter S of the
23302330 Internal Revenue Code, 26 U .S.C., Section 1361 et seq., and Section
23312331 2365 of this title, deductio ns pursuant to the provisions of the
23322332 Accelerated Cost Recovery System as defined and allowed in the
23332333 Economic Recovery Tax Act of 19 81, Public Law 97-34, 26 U.S.C.,
23342334 Section 168, for depreciation of assets placed into serv ice after
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23862386 December 31, 1981, shall not be allowed in calculating Oklahoma
23872387 taxable income. Such corporations shall be allowed a deduction for
23882388 depreciation of assets placed into ser vice after December 31, 1981,
23892389 in accordance with provisions of the Internal Revenue Code, 26
23902390 U.S.C., Section 1 et seq., in effect immediately prior to the
23912391 enactment of the Accelerated Cost Recovery System. The Oklahoma tax
23922392 basis for all such assets placed into service after December 31,
23932393 1981, calculated in this section shall be r etained and utilized for
23942394 all Oklahoma income tax purposes through the final dis position of
23952395 such assets.
23962396 Notwithstanding any other provisio ns of the Oklahoma Income Tax
23972397 Act, Section 2351 et seq. of this title, or of the Inte rnal Revenue
23982398 Code to the contrary , this subsection shall control calc ulation of
23992399 depreciation of assets placed into service after December 31, 1981,
24002400 and before January 1, 1983.
24012401 For assets placed in ser vice and held by a corporation in which
24022402 accelerated cost recovery system the Accelerated Cost Recovery
24032403 System was previously disallowed, an adjustment to taxable income is
24042404 required in the first taxable year beginning after December 31,
24052405 1982, to reconcile the basis of such assets to the basis allowed in
24062406 the Internal Revenue Code. The purpose o f this adjustment is to
24072407 equalize the basis and allowance for depreciation accounts between
24082408 that reported to the Internal Revenue Service and that reported to
24092409 Oklahoma this state.
24102410
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24612461 2. For tax years beginning on or af ter January 1, 2009, and
24622462 ending on or before December 31, 2009 , there shall be added to
24632463 Oklahoma taxable income any amou nt in excess of One Hundred Seventy -
24642464 five Thousand Dollars ($175,000.00) which has been deducted as a
24652465 small business expense under Internal Revenue Code, Section 179 as
24662466 provided in the American Recovery and Reinves tment Act of 2009.
24672467 C. 1. For taxable years beginning after December 31, 1987, the
24682468 taxable income of any corporation shall be further adjusted to
24692469 arrive at Oklahoma taxable incom e for transfers of technology to
24702470 qualified small businesses lo cated in Oklahoma this state. Such
24712471 transferor corporation shall be allowed an exemption from taxable
24722472 income of an amount equal to the amount of royalty paymen t received
24732473 as a result of such transfer; provided, however, such amount shal l
24742474 not exceed ten percent (10%) of the amount of gross proceeds
24752475 received by such transferor corporation as a result of the
24762476 technology transfer. Such exemption shall be allowed for a period
24772477 not to exceed ten (10) years from the date of receipt of the first
24782478 royalty payment accru ing from such transfer. No exemption may be
24792479 claimed for transfers of technology to qualified small businesses
24802480 made prior to January 1, 1988.
24812481 2. For purposes of this subsection:
24822482 a. “Qualified small business ” means an entity, whether
24832483 organized as a corporation, partnership, or
24842484 proprietorship, organized for profit with its
24852485
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25362536 principal place of business located within this state
25372537 and which meets the following criteria:
25382538 (1) Capitalization of not more than Two Hun dred Fifty
25392539 Thousand Dollars ($250,000.00),
25402540 (2) Having at least fifty percent (50%) of its
25412541 employees and assets located in Oklahoma this
25422542 state at the time of the transfer, and
25432543 (3) Not a subsidiary or affiliate of the transferor
25442544 corporation;
25452545 b. “Technology” means a proprietary process, f ormula,
25462546 pattern, device or compilati on of scientific or
25472547 technical information which is not in the public
25482548 domain;
25492549 c. “Transferor corporation ” means a corporation which is
25502550 the exclusive and undisputed owner of the technology
25512551 at the time the transfer is made; and
25522552 d. “Gross proceeds” means the total amount of
25532553 consideration for the transf er of technology, whether
25542554 the consideration is in money or otherwise.
25552555 D. 1. For taxable years beginning after December 31, 2005, the
25562556 taxable income of any corporation, estate or trust, shall be further
25572557 adjusted for qualifying gains receiving capital treatment. Such
25582558 corporations, estates or trusts shall be allowed a deduction from
25592559 Oklahoma taxable income for the amount of qualifying gains receiving
25602560
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26112611 capital treatment earned by the corporation, estat e or trust during
26122612 the taxable year and included in the fed eral taxable income of such
26132613 corporation, estate or trust.
26142614 2. As used in this subsection:
26152615 a. “qualifying gains receiving capital treatment ” means
26162616 the amount of net capital gains , as defined in Section
26172617 1222(11) of the Internal Revenue Code, included in the
26182618 federal income tax return of the corporation, estate
26192619 or trust that result from:
26202620 (1) the sale of real property or tangible personal
26212621 property located within Oklahoma this state that
26222622 has been directly or indirectly owned by the
26232623 corporation, estate or trust fo r a holding period
26242624 of at least five (5) years prior to the date of
26252625 the transaction from which such net capital gains
26262626 arise,
26272627 (2) the sale of stock or on the sale of an ownership
26282628 interest in an Oklahoma company, lim ited
26292629 liability company, or partnership where such
26302630 stock or ownership interest has been directly or
26312631 indirectly owned by the corporation, estate or
26322632 trust for a holding period of at least three (3)
26332633 years prior to the date of the transaction fro m
26342634 which the net capital gains arise, or
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26862686 (3) the sale of real property, tangible personal
26872687 property or intangible personal property located
26882688 within Oklahoma this state as part of the sale of
26892689 all or substantially all of the assets of an
26902690 Oklahoma company, limited liability co mpany, or
26912691 partnership where such property has been directly
26922692 or indirectly owned by such entity owned by the
26932693 owners of such entity, and used in or derived
26942694 from such entity for a period of at least three
26952695 (3) years prior to the date of the transaction
26962696 from which the net capital gains arise,
26972697 b. “holding period” means an uninterrupted period of
26982698 time. The holding period shall include any additional
26992699 period when the property was held by another
27002700 individual or entity, if such addi tional period is
27012701 included in the taxpayer’s holding period for the
27022702 asset pursuant to the Internal Revenue Code,
27032703 c. “Oklahoma company”, “limited liability company ”, or
27042704 “partnership” means an entity whose primary
27052705 headquarters have been located in Oklahoma this state
27062706 for at least three (3) uninterrupted years prior to
27072707 the date of the transaction from which the net capital
27082708 gains arise,
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27602760 d. “direct” means the taxpayer directly owns the asset,
27612761 and
27622762 e. “indirect” means the taxpayer owns an interest in a
27632763 pass-through entity (or chain of pass-through
27642764 entities) that sells the asset that gives rise to the
27652765 qualifying gains receiving capital treatment.
27662766 (1) With respect to sales of real property or
27672767 tangible personal property located within
27682768 Oklahoma this state, the deduction described in
27692769 this subsection shall not apply unless the pass -
27702770 through entity that makes the sale has held the
27712771 property for not less than five (5) uninterrupted
27722772 years prior to the date of the transaction that
27732773 created the capital gain, and each pass -through
27742774 entity included in the chain of owne rship has
27752775 been a member, partner, or sharehol der of the
27762776 pass-through entity in the tier immediately below
27772777 it for an uninterrupted period of not less than
27782778 five (5) years.
27792779 (2) With respect to sales of stock or ownership
27802780 interest in or sales of all or substantially all
27812781 of the assets of an Oklahoma com pany, limited
27822782 liability company, or partnership, the deduction
27832783 described in this subsection shall not apply
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28352835 unless the pass-through entity that makes the
28362836 sale has held the stock or ownership interest or
28372837 the assets for not less than three (3)
28382838 uninterrupted years prior to the date of the
28392839 transaction that created the capital gain, and
28402840 each pass-through entity included in the chain of
28412841 ownership has been a member, partn er or
28422842 shareholder of the pass-through entity in the
28432843 tier immediately below it for an uninterru pted
28442844 period of not less than three (3) years.
28452845 E. The Oklahoma adjusted gross income of any individual
28462846 taxpayer shall be fu rther adjusted as follows to arrive at Oklahoma
28472847 taxable income:
28482848 1. a. In For tax year 2023 and preceding tax years, in the
28492849 case of individuals, there shall be added or deducted,
28502850 as the case may be, the difference necessary to allow
28512851 personal exemptions of One Thousand Dollars
28522852 ($1,000.00) in lieu of the persona l exemptions allowed
28532853 by the Internal Revenue Code.
28542854 b. There For tax year 2023 and preceding tax years, there
28552855 shall be allowed an additional exemption of One
28562856 Thousand Dollars ($1,000.00) for each taxpayer or
28572857 spouse who is blind at the close of the tax year. For
28582858 purposes of this subparagraph, an individual is blind
28592859
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29102910 only if the central visual acuity of the individual
29112911 does not exceed 20/200 in the be tter eye with
29122912 correcting lenses, or if the visual acuity of the
29132913 individual is greater than 20/200, but is accomp anied
29142914 by a limitation in the fields of vision such that the
29152915 widest diameter of the visual field subt ends an angle
29162916 no greater than twenty (20) degrees.
29172917 c. There For tax years 1988 through 2023, there shall be
29182918 allowed an additional exemption of One Thousand
29192919 Dollars ($1,000.00) for each taxpaye r or spouse who is
29202920 sixty-five (65) years of age or older at the close of
29212921 the tax year based upon the filing status and federal
29222922 adjusted gross incom e of the taxpayer. Taxpayers wi th
29232923 the following filing status may claim this exemption
29242924 if the federal adjusted gross income does not exceed:
29252925 (1) Twenty-five Thousand Dollars ($25,000.00) if
29262926 married and filing jointly;
29272927 (2) Twelve Thousand Five Hundred Dollars ($12,500.00)
29282928 if married and filing sep arately;
29292929 (3) Fifteen Thousand Dollars ($15,000.00) if single;
29302930 and
29312931 (4) Nineteen Thousand Dollars ($19,000.00) if a
29322932 qualifying head of household.
29332933
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29842984 Provided, for taxable years beginning after December
29852985 31, 1999, amounts included in the calculation of
29862986 federal adjusted gross income pursuant to the
29872987 conversion of a traditional individual retirement
29882988 account to a Roth indivi dual retirement account shall
29892989 be excluded from federal adjusted gross income for
29902990 purposes of the income thresholds provided in this
29912991 subparagraph.
29922992 2. a. For taxable years beginni ng on or before December 31,
29932993 2005, in the case of individuals who use the standard
29942994 deduction in determining taxable income, there shall
29952995 be added or deducted, as the case may be, the
29962996 difference necessary to allow a s tandard deduction in
29972997 lieu of the standard deduction allowed by the Internal
29982998 Revenue Code, in an amount equal to the larg er of
29992999 fifteen percent (15%) of the Oklah oma adjusted gross
30003000 income or One Thousand Dollars ($1,000.00), but not to
30013001 exceed Two Thousand Dollars ($2, 000.00), except that
30023002 in the case of a married individual filing a s eparate
30033003 return such deduction shall be the larger of fifteen
30043004 percent (15%) of such Oklahoma adjusted gross income
30053005 or Five Hundred Dollars ($500.00) , but not to exceed
30063006 the maximum amount of One Thousand Dollars
30073007 ($1,000.00).
30083008
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30593059 b. For taxable years beginning on or after January 1,
30603060 2006, and before Janua ry 1, 2007, in the case of
30613061 individuals who use the standard deduction in
30623062 determining taxable income, there shall be added o r
30633063 deducted, as the case may be, the difference necessa ry
30643064 to allow a standard deduction in lieu of the standard
30653065 deduction allowed by the Internal Revenue Code, in an
30663066 amount equal to:
30673067 (1) Three Thousand Dollars ($3,000.00), if the filing
30683068 status is married filing joint, h ead of household
30693069 or qualifying widow; or
30703070 (2) Two Thousand Dollars ($2,000.00), if the filing
30713071 status is single or married filing separate.
30723072 c. For the taxable year beginning on January 1, 2007, and
30733073 ending December 31, 2007, in the case of indivi duals
30743074 who use the standard deduction in determining ta xable
30753075 income, there shall be added o r deducted, as the case
30763076 may be, the difference necessary to allow a standard
30773077 deduction in lieu of the standard deduction allowed by
30783078 the Internal Revenue Code, in an amount equal t o:
30793079 (1) Five Thousand Five Hundred Dollars ($5,500.00),
30803080 if the filing status is married filing joint or
30813081 qualifying widow; or
30823082
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31333133 (2) Four Thousand One Hundred Twenty -five Dollars
31343134 ($4,125.00) for a head of household; or
31353135 (3) Two Thousand Seven Hundre d Fifty Dollars
31363136 ($2,750.00), if the filing status is s ingle or
31373137 married filing separate.
31383138 d. For the taxable year beginning on January 1, 2008, and
31393139 ending December 31, 2008, in the case of individuals
31403140 who use the standard deduction in dete rmining taxable
31413141 income, there shall be added or deducted, as the case
31423142 may be, the difference necessary to allow a standard
31433143 deduction in lieu of the stan dard deduction allowed by
31443144 the Internal Revenue Code, in an amount equal to:
31453145 (1) Six Thousand Five Hundred Dollars ($6,500.0 0), if
31463146 the filing status is married filing joint or
31473147 qualifying widow, or
31483148 (2) Four Thousand Eight Hundred Seventy -five Dollars
31493149 ($4,875.00) for a head of household, or
31503150 (3) Three Thousand Two Hundred Fifty Dollars
31513151 ($3,250.00), if the filing status is single or
31523152 married filing separate.
31533153 e. For the taxable year beg inning on January 1, 2009, and
31543154 ending December 31, 2009, in the case of individuals
31553155 who use the standard deduction in d etermining taxable
31563156 income, there shall be added or deducted, as the case
31573157
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32083208 may be, the difference necessary to allow a standard
32093209 deduction in lieu of the standard deduction all owed by
32103210 the Internal Revenue Code, in an amount equal to:
32113211 (1) Eight Thousand Five Hundred Dollars ($8,500.00),
32123212 if the filing status is married fili ng joint or
32133213 qualifying widow, or
32143214 (2) Six Thousand Three Hundred Seventy -five Dollars
32153215 ($6,375.00) for a head of household, or
32163216 (3) Four Thousand Two Hundr ed Fifty Dollars
32173217 ($4,250.00), if the fil ing status is single or
32183218 married filing separate.
32193219 Oklahoma adjusted gross income sha ll be increased by
32203220 any amounts paid for motor vehicle excise taxes which
32213221 were deducted as allowed by the Internal Revenue Code.
32223222 f. For taxable years beginning on or after January 1,
32233223 2010, and ending on December 31, 2016, in the case of
32243224 individuals who use the standard deduction in
32253225 determining taxable income, there shall be added or
32263226 deducted, as the case may be, the difference necessary
32273227 to allow a standard deduction equal to t he standard
32283228 deduction allowed by the Internal Revenue Code, based
32293229 upon the amount and filing status prescr ibed by such
32303230 Code for purposes of filing federal individual income
32313231 tax returns.
32323232
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32833283 g. For taxable years beginning on or after January 1,
32843284 2017 tax years 2017 throu gh 2023, in the case of
32853285 individuals who use the standard deduction in
32863286 determining taxable income, there shall be ad ded or
32873287 deducted, as the case may be, the difference necessary
32883288 to allow a standard deduction in lieu of the standard
32893289 deduction allowed by the Internal Revenue Co de, as
32903290 follows:
32913291 (1) Six Thousand Three Hundred Fifty Dollars
32923292 ($6,350.00) for single or married filing
32933293 separately,
32943294 (2) Twelve Thousand Seven Hundr ed Dollars
32953295 ($12,700.00) for married filing jointly or
32963296 qualifying widower with dependent child, and
32973297 (3) Nine Thousand Three Hundred Fifty Dollars
32983298 ($9,350.00) for head of househ old.
32993299 h. For tax year 2024 and subsequent tax years, in the
33003300 case of individuals who use the standard deduction in
33013301 determining taxable income, there shall be ad ded or
33023302 deducted, as the case may be, the difference necessary
33033303 to allow a standard deducti on in lieu of the standard
33043304 deduction allowed by the In ternal Revenue Code, as
33053305 follows:
33063306
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33573357 (1) Thirteen Thousand Five Hundred Fifty Dollars
33583358 ($13,550.00) for single or married filing
33593359 separately,
33603360 (2) Twenty-four Thousand Nine Hundred Dollars
33613361 ($24,900.00) for married filing jointly or
33623362 qualifying widower with depende nt child, and
33633363 (3) Nineteen Thousand Two Hundred Twenty -five Dollars
33643364 ($19,225.00) for head of household.
33653365 3. a. In the case of reside nt and part-year resident
33663366 individuals having adjusted gross income from sources
33673367 both within and without the state, the itemiz ed or
33683368 standard deductions and perso nal exemptions shall be
33693369 reduced to an amount which is the same portion of the
33703370 total thereof as Oklahoma ad justed gross income is of
33713371 adjusted gross income. To the extent itemized
33723372 deductions include allowable moving expens e, proration
33733373 of moving expense shall not be required or permitted
33743374 but allowable moving expense shall be fully deductible
33753375 for those taxpayers moving within or into Oklahoma
33763376 this state and no part of moving expense shall be
33773377 deductible for those taxpayers mov ing without or out
33783378 of Oklahoma this state. All other itemized or
33793379 standard deductions and persona l exemptions shall be
33803380 subject to proration as provided by law.
33813381
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34323432 b. For taxable years beginning on or after January 1,
34333433 2018, the net amount of itemized deduction s allowable
34343434 on an Oklahoma income tax return, subject to the
34353435 provisions of paragraph 24 of this subsecti on, shall
34363436 not exceed Seventeen Thous and Dollars ($17,000.00).
34373437 For purposes of this subparagraph, charitable
34383438 contributions and medical expenses deductib le for
34393439 federal income tax pu rposes shall be excluded from the
34403440 amount of Seventeen Th ousand Dollars ($17,000.00) as
34413441 specified by this subparagraph.
34423442 4. A resident individual with a physical disability
34433443 constituting a substantial handicap to employment may de duct from
34443444 Oklahoma adjusted gross income such expenditures to modify a motor
34453445 vehicle, home or workplace as are necessary to compensate for h is or
34463446 her handicap. A veteran certified by the Department of Veterans
34473447 Affairs of the federal government as having a service-connected
34483448 disability shall be conclusively presum ed to be an individual wit h a
34493449 physical disability constituting a substantial handicap to
34503450 employment. The Tax Commission shall promulgate rules containing a
34513451 list of combinations of common disabiliti es and modifications which
34523452 may be presumed to qualify for this deduction. The Tax Commission
34533453 shall prescribe necessary requirements for ver ification.
34543454 5. a. Before July 1, 2010, the first One Thousand Five
34553455 Hundred Dollars ($1,500.00) received by any person
34563456
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35073507 from the United States as s alary or compensation in
35083508 any form, other than retirement benefits, as a member
35093509 of any component of the Armed Forces of the United
35103510 States shall be deducted from taxable income.
35113511 b. On or after July 1, 2010, one hundred percent (10 0%)
35123512 of the income received by any person from the United
35133513 States as salary or co mpensation in any form, o ther
35143514 than retirement benefits, as a member of any component
35153515 of the Armed Forces of the United States shall be
35163516 deducted from taxable income.
35173517 c. Whenever the filing of a timely incom e tax return by a
35183518 member of the Armed Forces of the Unit ed States is
35193519 made impracticable or impossible of accomplishment by
35203520 reason of:
35213521 (1) absence from the United States, which term
35223522 includes only the states and the District of
35233523 Columbia;
35243524 (2) absence from the State of Oklahoma this state
35253525 while on active duty; or
35263526 (3) confinement in a hospital within the United
35273527 States for treatment of wounds, injuries or
35283528 disease,
35293529 the time for filing a return and paying an income tax
35303530 shall be and is hereby extended without incurring
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35823582 liability for interest or penalties, to the fifteenth
35833583 day of the third month following the month in which:
35843584 (a) Such individual shall return to the United
35853585 States if the extension is grant ed pursuant
35863586 to subparagraph a of this paragraph, return
35873587 to the State of Oklahoma this state if the
35883588 extension is granted pursuant to
35893589 subparagraph b of this paragraph or be
35903590 discharged from such hospital if the
35913591 extension is granted pursuant to
35923592 subparagraph c of this paragraph; or
35933593 (b) An executor, administrator, or conservator
35943594 of the estate of the taxpay er is appointed,
35953595 whichever event occurs the earl iest.
35963596 Provided, that the Tax Commission may, in its discretion, gr ant
35973597 any member of the Armed Forces of the Unit ed States an extension of
35983598 time for filing of income tax returns and payment of income tax
35993599 without incurring liabiliti es for interest or penalt ies. Such
36003600 extension may be granted only when in the judgm ent of the Tax
36013601 Commission a good cause exists therefor and may be for a period in
36023602 excess of six (6) months. A record of every suc h extension granted,
36033603 and the reason therefor, shall be kept.
36043604 6. Before July 1, 2010, the salary or any other form of
36053605 compensation, received from the United States by a member of any
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36573657 component of the Armed Forces of the United States, shall be
36583658 deducted from taxable income d uring the time in which t he person is
36593659 detained by the enemy in a conflict, is a prisoner of war or is
36603660 missing in action and not deceased; provided, after July 1, 2010,
36613661 all such salary or compensation sh all be subject to the deduction as
36623662 provided pursuant to pa ragraph 5 of this subsection.
36633663 7. a. An individual taxpayer, whether resident or
36643664 nonresident, may deduct an amount equal to the federal
36653665 income taxes paid by the taxpayer during the taxable
36663666 year.
36673667 b. Federal taxes as described in subparagraph a of this
36683668 paragraph shall be deductib le by any individual
36693669 taxpayer, whether resident or nonresident, only to the
36703670 extent they relate to income subject to taxation
36713671 pursuant to the provisions of the Oklahoma Income Ta x
36723672 Act. The maximum amount allowable in the preceding
36733673 paragraph shall be prorated on the ratio of the
36743674 Oklahoma adjusted gross income to federal adjusted
36753675 gross income.
36763676 c. For the purpose of this paragraph, “federal income
36773677 taxes paid” shall mean federal inco me taxes, surtaxes
36783678 imposed on incomes or excess profit s taxes, as though
36793679 the taxpayer was on the accrual basis. In determining
36803680 the amount of deduction for federa l income taxes for
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37323732 tax year 2001, the amount of the deduction shall not
37333733 be adjusted by the amo unt of any accelerated ten
37343734 percent (10%) tax rate bracket credit or advanced
37353735 refund of the credit received during the tax year
37363736 provided pursuant to the federal Economi c Growth and
37373737 Tax Relief Reconciliation Act of 2001, P.L. No. 107-
37383738 16, and the advanced ref und of such credit shall n ot
37393739 be subject to taxation.
37403740 d. The provisions of this paragraph shall apply to all
37413741 taxable years ending after December 31, 1978, and
37423742 beginning before January 1, 2006.
37433743 8. Retirement benefits not to exceed Five Thousand Five Hundred
37443744 Dollars ($5,500.00) for the 2004 ta x year, Seven Thousand Five
37453745 Hundred Dollars ($7,500.00) for the 2005 t ax year and Ten Thousand
37463746 Dollars ($10,000.00) for the 2006 tax yea r and all subsequent tax
37473747 years, which are rece ived by an individual from the civil s ervice of
37483748 the United States, the Oklahoma Public Emplo yees Retirement System,
37493749 the Teachers’ Retirement System of Oklahoma, the Oklahoma Law
37503750 Enforcement Retirement System, the Oklahoma Firefigh ters Pension and
37513751 Retirement System, the Oklahoma Police Pension and Retirement
37523752 System, the employee retirement systems cre ated by counties pursuant
37533753 to Section 951 et seq. of Title 19 of the Oklahoma Statutes, the
37543754 Uniform Retirement Syst em for Justices and Judges, the Oklahoma
37553755 Wildlife Conservation Department Retirement Fund, the Oklahoma
37563756
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38073807 Employment Security Commission Ret irement Plan, or the empl oyee
38083808 retirement systems created by municipalities pursuant to Section 48 -
38093809 101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt
38103810 from taxable income.
38113811 9. In taxable years beginning after December 3l, 1984 , Social
38123812 Security benefits received by an individual shall be exempt f rom
38133813 taxable income, to the extent such benefits are included in th e
38143814 federal adjusted gross income pursuant to th e provisions of Section
38153815 86 of the Internal Revenue Code, 26 U.S. C., Section 86.
38163816 10. For taxable years beginning afte r December 31, 1994, lump-
38173817 sum distributions from employer plans of deferred compens ation,
38183818 which are not qualified plans within the meaning of Section 401(a)
38193819 of the Internal Reve nue Code, 26 U.S.C., Section 401(a), and which
38203820 are deposited in and accounted for within a separate bank a ccount or
38213821 brokerage account in a financial institution within this state,
38223822 shall be excluded from taxable income in the same manner as a
38233823 qualifying rollover contribution to an i ndividual retirement account
38243824 within the meaning of Se ction 408 of the Internal Revenue Code, 26
38253825 U.S.C., Section 408. Amounts withdrawn from such bank or brokerage
38263826 account, including any earnings thereon, shall be included in
38273827 taxable income when withdrawn in the sam e manner as withdrawal s from
38283828 individual retirement accounts within the meaning of Section 408 of
38293829 the Internal Revenue Code.
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38813881 11. In taxable years beginning after December 31, 1995,
38823882 contributions made to and interest rece ived from a medical saving s
38833883 account established pursua nt to Sections 2621 throu gh 2623 of Title
38843884 63 of the Oklahoma Statutes shall be exempt from taxable income.
38853885 12. For taxable years beginning after December 31, 1996, the
38863886 Oklahoma adjusted gross income of any individual taxpayer who is a
38873887 swine or poultry produce r may be further adjusted for the deduction
38883888 for depreciation allowed for new construction or expansion costs
38893889 which may be computed using the same depreciation m ethod elected for
38903890 federal income tax p urposes except that the us eful life shall be
38913891 seven (7) years for purposes of th is paragraph. If depreciation is
38923892 allowed as a deduction in determining the adjust ed gross income of
38933893 an individual, any depreciation calculated and claimed pursuant to
38943894 this section shall in no event be a duplicati on of any depreciation
38953895 allowed or permitted on the federal income tax return of the
38963896 individual.
38973897 13. a. In taxable years beginning after December 31, 2002,
38983898 nonrecurring adoption expen ses paid by a resident
38993899 individual taxpayer in connection with:
39003900 (1) the adoption of a minor, or
39013901 (2) a proposed adoption of a minor which did not
39023902 result in a decreed adoption,
39033903 may be deducted from the O klahoma adjusted gross
39043904 income.
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39563956 b. The deductions for adoptions and proposed adoptions
39573957 authorized by this paragraph shall not excee d Twenty
39583958 Thousand Dollars ($20,000.00) per calendar year.
39593959 c. The Tax Commission shall promulgate rules to implement
39603960 the provisions of th is paragraph which shall contain a
39613961 specific list of nonrecurring adoption expenses w hich
39623962 may be presumed to qu alify for the deduction. Th e Tax
39633963 Commission shall prescribe necessary requirements for
39643964 verification.
39653965 d. “Nonrecurring adoption expenses ” means adoption fees,
39663966 court costs, medical expenses, attorney fees and
39673967 expenses which are dir ectly related to the legal
39683968 process of adoption of a child including, but not
39693969 limited to, costs relating to the adoption study,
39703970 health and psychological examinations, transp ortation
39713971 and reasonable costs of lodging and f ood for the child
39723972 or adoptive parents which are incurred to comp lete the
39733973 adoption process and are not reimbursed by o ther
39743974 sources. The term “nonrecurring adoption expenses ”
39753975 nonrecurring adoption expenses shall not include
39763976 attorney fees incurred for the purpose of litigating a
39773977 contested adoption, from and after the point of the
39783978 initiation of the contest, costs associated with
39793979 physical remodeling, renovation and alteration of th e
39803980
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40314031 adoptive parents’ home or property, except for a
40324032 special needs child as authorized by the court.
40334033 14. a. In taxable years beginning before Janua ry 1, 2005,
40344034 retirement benefits not to exceed the amo unts
40354035 specified in this paragraph, which are received by an
40364036 individual sixty-five (65) years of age or older and
40374037 whose Oklahoma adjusted gross income is Twenty -five
40384038 Thousand Dollars ($25,000.00) or less if the fili ng
40394039 status is single, head of household, or married filing
40404040 separate, or Fifty Thousand Dollars ($50,00 0.00) or
40414041 less if the filing status is married filing joint or
40424042 qualifying widow, shall be exempt from taxable income.
40434043 In taxable years beginning after December 31, 2004,
40444044 retirement benefits not to e xceed the amounts
40454045 specified in this paragraph, which are received by an
40464046 individual whose Oklahoma adjusted gross i ncome is
40474047 less than the qualifying amount speci fied in this
40484048 paragraph, shall be exempt from taxable income.
40494049 b. For purposes of this paragraph, the qualifying amount
40504050 shall be as follows:
40514051 (1) in taxable years beginning after December 31,
40524052 2004, and prior to January 1, 2 007, the
40534053 qualifying amount shall be Thirty -seven Thousand
40544054 Five Hundred Dollars ($37,500.00) or less if the
40554055
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41064106 filing status is single, head of household, or
41074107 married filing separate, or Seventy -five Thousand
41084108 Dollars ($75,000.00) or less if the filing status
41094109 is married filing jointly or qualifying widow,
41104110 (2) in the taxable year beginning January 1, 2007,
41114111 the qualifying amount shall be Fifty Thousand
41124112 Dollars ($50,000.00) or less if the filing statu s
41134113 is single, head of household, or married filing
41144114 separate, or One Hundred Thousand Dollars
41154115 ($100,000.00) or less if th e filing status is
41164116 married filing jointly or qualifying widow,
41174117 (3) in the taxable year beginning January 1, 2008,
41184118 the qualifying amount shall be Sixty -two Thousand
41194119 Five Hundred Dollars ($62,500 .00) or less if the
41204120 filing status is single, head of household, or
41214121 married filing separate, or One Hundred Twenty-
41224122 five Thousand Dollars ($125,000.00) or less if
41234123 the filing status is married filing joi ntly or
41244124 qualifying widow,
41254125 (4) in the taxable year beginning Januar y 1, 2009,
41264126 the qualifying amount shall be One Hundred
41274127 Thousand Dollars ($100,00 0.00) or less if the
41284128 filing status is single, head of household, or
41294129 married filing separate, or Two Hundred Thousand
41304130
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41814181 Dollars ($200,000.00) or less if the filing
41824182 status is married filing jointly or qualifying
41834183 widow, and
41844184 (5) in the taxable year beginning January 1, 20 10,
41854185 and subsequent taxable years, there shall be no
41864186 limitation upon the qualifying amount.
41874187 c. For purposes of this paragraph, “retirement benefits”
41884188 means the total distributions or withdrawals from the
41894189 following:
41904190 (1) an employee pension benefit p lan which satisfies
41914191 the requirements of Section 401 o f the Internal
41924192 Revenue Code, 26 U.S.C., Section 401,
41934193 (2) an eligible deferred compensati on plan that
41944194 satisfies the requirements of Section 457 of the
41954195 Internal Revenue Code, 26 U .S.C., Section 457,
41964196 (3) an individual retirement account, annuity or
41974197 trust or simplified employee pension that
41984198 satisfies the requirements of Section 408 of the
41994199 Internal Revenue Code, 26 U.S.C., Section 4 08,
42004200 (4) an employee annuity subject to the provisions of
42014201 Section 403(a) or (b) of the Internal Revenue
42024202 Code, 26 U.S.C., Section 403( a) or (b),
42034203
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42544254 (5) United States Retirement Bonds which satisfy the
42554255 requirements of Section 86 of the Internal
42564256 Revenue Code, 26 U.S.C., Section 86, or
42574257 (6) lump-sum distributions fro m a retirement plan
42584258 which satisfies the requirements of Section
42594259 402(e) of the Internal Revenue Code, 26 U.S.C.,
42604260 Section 402(e).
42614261 d. The amount of the exemption provided by this paragra ph
42624262 shall be limited to Five Thousand Five Hundred Dollars
42634263 ($5,500.00) for the 2004 tax year, Seven Thousand Five
42644264 Hundred Dollars ($7,500.00) for the 200 5 tax year and
42654265 Ten Thousand Dollars ($10,000.00) for the tax year
42664266 2006 and for all subse quent tax years. Any indi vidual
42674267 who claims the exemption provided for in paragraph 8
42684268 of this subsection shall not be permitt ed to claim a
42694269 combined total exemption pursuant to this paragraph
42704270 and paragraph 8 of this su bsection in an amount
42714271 exceeding Five Thousand Five Hund red Dollars
42724272 ($5,500.00) for the 2004 tax year, Seven Thousand Five
42734273 Hundred Dollars ($7,500.00) for the 2005 tax year and
42744274 Ten Thousand Dollars ($10,000.0 0) for the 2006 tax
42754275 year and all subsequent tax years.
42764276 15. In taxable years beginning a fter December 31, 1999, fo r an
42774277 individual engaged in production agriculture who has filed a
42784278
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43294329 Schedule F form with the taxpayer ’s federal income tax return for
43304330 such taxable year, there shall be excluded from taxable income any
43314331 amount which was included as federal taxable income or federal
43324332 adjusted gross income and which consists of the discharge of an
43334333 obligation by a creditor of the taxpayer incurred to finance the
43344334 production of agricultural products.
43354335 16. In taxable years beginning December 31, 2000, an amou nt
43364336 equal to one hundred pe rcent (100%) of the amount of any scholarship
43374337 or stipend received from participation in the Oklahom a Police Corps
43384338 Program, as established in Section 2 -140.3 of Title 47 of the
43394339 Oklahoma Statutes shall be exempt from taxable income.
43404340 17. a. In taxable years beginning a fter December 31, 2001,
43414341 and before January 1, 2005, t here shall be allowed a
43424342 deduction in the amount of contributions to accounts
43434343 established pursuant to the Oklahoma College Savings
43444344 Plan Act. The deduction shall equal the amount of
43454345 contributions to accounts, but in no event shall the
43464346 deduction for each con tributor exceed Two Thousand
43474347 Five Hundred Dollars ($2,500.00) each taxable year for
43484348 each account.
43494349 b. In taxable years beginning after Dec ember 31, 2004,
43504350 each taxpayer shall be allowed a deduction for
43514351 contributions to accounts established pursuant to the
43524352 Oklahoma College Savings Pla n Act. The maximum annual
43534353
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44044404 deduction shall equal the amount of contributions to
44054405 all such accounts plus any contributions to such
44064406 accounts by the taxpayer for prior tax able years after
44074407 December 31, 2004, which were not deducted, bu t in no
44084408 event shall the deduction fo r each tax year exceed Ten
44094409 Thousand Dollars ($10,000.00) for e ach individual
44104410 taxpayer or Twenty Thous and Dollars ($20,000.00) for
44114411 taxpayers filing a joint return. Any amount of a
44124412 contribution that is not deducted by the taxpayer in
44134413 the year for which the contribution is made may be
44144414 carried forward as a deduction from income for the
44154415 succeeding five (5) years. For taxable years
44164416 beginning after December 31, 200 5, deductions may be
44174417 taken for contributions and rollovers made during a
44184418 taxable year and up to Apr il 15 of the succeeding
44194419 year, or the due date of a taxpayer ’s state income tax
44204420 return, excluding exte nsions, whichever is later.
44214421 Provided, a deduction for the same co ntribution may
44224422 not be taken for two (2) different tax able years.
44234423 c. In taxable years beginning after December 31, 2006,
44244424 deductions for contributions made pursuant to
44254425 subparagraph b of this paragraph shall be limited as
44264426 follows:
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44784478 (1) for a taxpayer who qualified for the five -year
44794479 carryforward election and who takes a rollover or
44804480 nonqualified withdrawal during that period, the
44814481 tax deduction otherwise avai lable pursuant to
44824482 subparagraph b of this paragraph shall be reduced
44834483 by the amount which is equal to the rol lover or
44844484 nonqualified withdrawal, and
44854485 (2) for a taxpayer who elects to take a r ollover or
44864486 nonqualified withdrawal within the same ta x year
44874487 in which a contribution was made to the
44884488 taxpayer’s account, the tax deduction oth erwise
44894489 available pursuant to subparagraph b of this
44904490 paragraph shall be reduced by the amo unt of the
44914491 contribution which is equ al to the rollover or
44924492 nonqualified withdrawal.
44934493 d. If a taxpayer elects to take a rollover on a
44944494 contribution for which a deduction has been taken
44954495 pursuant to subparagra ph b of this paragraph within
44964496 one (1) year of the dat e of contribution, the amo unt
44974497 of such rollover shall be included in the adjuste d
44984498 gross income of the taxpayer in the taxable year of
44994499 the rollover.
45004500 e. If a taxpayer makes a nonqualified withdraw al of
45014501 contributions for which a deduction was taken pursuant
45024502
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45534553 to subparagraph b of this paragraph, s uch nonqualified
45544554 withdrawal and any earnings thereon shall be included
45554555 in the adjusted gross income o f the taxpayer in the
45564556 taxable year of the nonqualified withdrawal.
45574557 f. As used in this paragraph:
45584558 (1) “non-qualified withdrawal” means a withdrawal
45594559 from an Oklahoma College Savings Plan account
45604560 other than one of the following:
45614561 (a) a qualified withdrawal,
45624562 (b) a withdrawal made as a resul t of the death
45634563 or disability of the designated beneficiary
45644564 of an account,
45654565 (c) a withdrawal that is made on the account of
45664566 a scholarship or the allowance or payment
45674567 described in Section 135(d)(1)(B) or (C) or
45684568 by the Internal Revenue Code, received by
45694569 the designated beneficiary to the extent t he
45704570 amount of the refund does not exceed the
45714571 amount of the scholarship, allowance, or
45724572 payment, or
45734573 (d) a rollover or change of designa ted
45744574 beneficiary as permitted by subsection F of
45754575 Section 3970.7 of Title 70 of the Oklahoma
45764576 Statutes, and
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46284628 (2) “rollover” means the transfer of funds from the
46294629 Oklahoma College Sav ings Plan to any other plan
46304630 under Section 529 of the Internal Revenue Code.
46314631 18. For tax years 2006 through 2021, retirement benefits
46324632 received by an individual from any component of the Armed Forces of
46334633 the United States in an amount not to exceed the great er of seventy-
46344634 five percent (75%) of such benefits or Ten Thousand Dollars
46354635 ($10,000.00) shall be exempt from taxable income but in no case less
46364636 than the amount of the exemption provided by paragraph 14 of this
46374637 subsection. For tax year 2022 and subsequent t ax years, retirement
46384638 benefits received by an individual from any component o f the Armed
46394639 Forces of the United States shall be exempt from taxa ble income.
46404640 19. For taxable years beginning after December 31, 20 06,
46414641 retirement benefits received by federal civil service retirees,
46424642 including survivor annuities, paid in lieu of Social Securit y
46434643 benefits shall be exempt from taxable income to the extent such
46444644 benefits are included in the federal adjusted gross income pursuant
46454645 to the provisions of Section 86 of the Inte rnal Revenue Code, 26
46464646 U.S.C., Section 86, according to the following schedule:
46474647 a. in the taxable year beginning January 1, 2007, twenty
46484648 percent (20%) of such benefits shall be exempt,
46494649 b. in the taxable year beginning January 1, 2008, forty
46504650 percent (40%) of such benefits shall be ex empt,
46514651
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47024702 c. in the taxable year beginning January 1, 200 9, sixty
47034703 percent (60%) of such benefits shall be exempt,
47044704 d. in the taxable year b eginning January 1, 2010, eighty
47054705 percent (80%) of such benefits shall be exempt, and
47064706 e. in the taxable year beginning January 1, 201 1, and
47074707 subsequent taxable years, one hundred percent (100%)
47084708 of such benefits shall be exempt.
47094709 20. a. For taxable years beginning after December 31, 2007, a
47104710 resident individual may deduct up to Ten Thousand
47114711 Dollars ($10,000.00) from Oklahoma adjus ted gross
47124712 income if the individual, or the dependent of the
47134713 individual, while living, donates one or more human
47144714 organs of the individu al to another human being for
47154715 human organ transplantation. As used in this
47164716 paragraph, “human organ” means all or part of a liver,
47174717 pancreas, kidney, intestine, lung, or bone marrow. A
47184718 deduction that is claimed under this para graph may be
47194719 claimed in the taxable year in which the human organ
47204720 transplantation occurs.
47214721 b. An individual may claim this dedu ction only once, and
47224722 the deduction may be claimed only for unreimbursed
47234723 expenses that are incurred by the individual and
47244724 related to the organ donation of the in dividual.
47254725
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47764776 c. The Oklahoma Tax Commiss ion shall promulgate rules to
47774777 implement the provisions of t his paragraph which shall
47784778 contain a specific list of expenses which may be
47794779 presumed to qualify for the deduction. The Tax
47804780 Commission shall prescribe necessary requirements for
47814781 verification.
47824782 21. For taxable years beginning after December 31, 2009, there
47834783 shall be exempt from taxabl e income any amount received by the
47844784 beneficiary of the death benefit for an emergency medical technician
47854785 or a registered emergency med ical responder provided by Section 1 -
47864786 2505.1 of Title 63 of the Oklahoma Statutes.
47874787 22. For taxable years beginning after December 31 , 2008,
47884788 taxable income shall be increased by any unemployment compensation
47894789 exempted under Section 85(c) of the Internal Revenue Code, 26
47904790 U.S.C., Section 85(c)(2009).
47914791 23. For taxable years beginning after December 31, 20 08, there
47924792 shall be exempt from taxable income any payment in an amount less
47934793 than Six Hundred Dollars ($600.00) received by a person as an award
47944794 for participation in a competitive livestock show eve nt. For
47954795 purposes of this paragraph, the payment shall be t reated as a
47964796 scholarship amount paid by the entity sponsoring the event and the
47974797 sponsoring entity shall cause the payment to be categorized as a
47984798 scholarship in its books and records.
47994799
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48504850 24. For taxable years be ginning on or after January 1, 2016,
48514851 taxable income shall be increased by a ny amount of state and local
48524852 sales or income taxes de ducted under 26 U.S.C., Section 164 of the
48534853 Internal Revenue Code. If the amount of state and local taxes
48544854 deducted on the federal return is limited, taxable income on the
48554855 state return shall be increased only by th e amount actually deducted
48564856 after any such limitations are applied.
48574857 25. For taxable years beginning after December 31, 2020, each
48584858 taxpayer shall be allowed a deduction for contributions to accounts
48594859 established pursuant t o the Achieving a Better L ife Experience
48604860 (ABLE) Program as established in Secti on 4001.1 et seq. of Title 56
48614861 of the Oklahoma Statutes. For any tax year, the de duction provided
48624862 for in this paragrap h shall not exceed Ten Thousand Dollars
48634863 ($10,000.00) for an individual taxpayer or Twenty Thous and Dollars
48644864 ($20,000.00) for taxpayers filing a joint return. Any amount of
48654865 contribution not deducted by the taxpayer in the tax year for which
48664866 the contribution is made m ay be carried forward as a deduction from
48674867 income for up to five (5) tax yea rs. Deductions may be taken for
48684868 contributions made d uring the tax year and through April 15 of the
48694869 succeeding tax year, or through th e due date of a taxpayer’s state
48704870 income tax return excluding extensions, whichever is later.
48714871 Provided, a deduction for the same con tribution may not be taken in
48724872 more than one (1) tax year.
48734873
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49244924 F. 1. For taxable years beginning after Decem ber 31, 2004, a
49254925 deduction from the Oklahoma adjusted gross income of any individual
49264926 taxpayer shall be allowed for q ualifying gains receiving capital
49274927 treatment that are included in the federal ad justed gross income of
49284928 such individual taxpayer during the taxable year.
49294929 2. As used in this subsection:
49304930 a. “qualifying gains receiving capital treatment ” means
49314931 the amount of net capital gains, as defined in Secti on
49324932 1222(11) of the Internal Revenue Code, included in an
49334933 individual taxpayer’s federal income tax return that
49344934 result from:
49354935 (1) the sale of real property or tangible person al
49364936 property located within Oklahoma this state that
49374937 has been directly or in directly owned by the
49384938 individual taxpayer for a holdi ng period of at
49394939 least five (5) years prior to the date of the
49404940 transaction from which suc h net capital gains
49414941 arise,
49424942 (2) the sale of stock or the sale of a direct or
49434943 indirect ownership interest in an Oklahoma
49444944 company, limited liability company, or
49454945 partnership where such stock or ownership
49464946 interest has been directly or indirectly owned by
49474947 the individual taxpayer for a holding period of
49484948
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49994999 at least two (2) years prior to the date of t he
50005000 transaction from which th e net capital gains
50015001 arise, or
50025002 (3) the sale of real property, tangible personal
50035003 property or intangible personal property located
50045004 within Oklahoma this state as part of the sale of
50055005 all or substantially all of the assets of an
50065006 Oklahoma company, limited liability company , or
50075007 partnership or an Oklahoma proprietorship
50085008 business enterprise where such property has been
50095009 directly or indirectly owned by such entity or
50105010 business enterprise or owned by the own ers of
50115011 such entity or business enterpr ise for a period
50125012 of at least two (2) years prior to the date of
50135013 the transaction from which the net capital gains
50145014 arise,
50155015 b. “holding period” means an uninterrupted peri od of
50165016 time. The holding period shall include any ad ditional
50175017 period when the property was held by another
50185018 individual or entity, if such additional period is
50195019 included in the taxpayer ’s holding period for the
50205020 asset pursuant to the Internal Revenue Code,
50215021 c. “Oklahoma company,” “limited liability company, ” or
50225022 “partnership” means an entity whose pr imary
50235023
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50745074 headquarters have be en located in Oklahoma this state
50755075 for at least three (3) uninterrupted years prior to
50765076 the date of the transaction from which the net capital
50775077 gains arise,
50785078 d. “direct” means the individual taxpayer directly owns
50795079 the asset,
50805080 e. “indirect” means the individual taxpayer o wns an
50815081 interest in a pass-through entity (or chain of pass -
50825082 through entities) that sells the asset that gives rise
50835083 to the qualifying gains receiving capital treatment.
50845084 (1) With respect to sales of real pro perty or
50855085 tangible personal property locate d within
50865086 Oklahoma this state, the deduction described in
50875087 this subsection shall not apply unless the pass -
50885088 through entity that makes the sale h as held the
50895089 property for not less than five (5) uninterrupted
50905090 years prior to the date of the transaction that
50915091 created the capital gain, and each pass -through
50925092 entity included in the chain of ownership has
50935093 been a member, partner, or shareholder of the
50945094 pass-through entity in the tier immediately below
50955095 it for an uninterrupted period of not le ss than
50965096 five (5) years.
50975097
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51485148 (2) With respect to sales of stock or ownership
51495149 interest in or sales of all or substantially all
51505150 of the assets of an Oklahoma company, limited
51515151 liability company, partnership or Oklahoma
51525152 proprietorship business enterprise, the deduction
51535153 described in this subsection shall no t apply
51545154 unless the pass-through entity that makes the
51555155 sale has held the stock or ownership interest for
51565156 not less than two (2) uninterrupted years pri or
51575157 to the date of the transaction that created the
51585158 capital gain, and each pass-through entity
51595159 included in the chain of owners hip has been a
51605160 member, partner or shareholder of the pass -
51615161 through entity in the tier immediately below it
51625162 for an uninterrupted period of not less than two
51635163 (2) years. For purposes of this division,
51645164 uninterrupted ownership prior to July 1, 2007,
51655165 shall be included in the determination of the
51665166 required holding period prescribed by this
51675167 division, and
51685168 f. “Oklahoma proprietorship business en terprise” means a
51695169 business enterprise whose income and expenses ha ve
51705170 been reported on Schedule C or F of an individual
51715171 taxpayer’s federal income tax r eturn, or any similar
51725172
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52235223 successor schedule published by the Internal Revenue
52245224 Service and whose primary headquarters have been
52255225 located in Oklahoma this state for at least three (3)
52265226 uninterrupted years prior to the da te of the
52275227 transaction from which the net capital gains arise.
52285228 G. 1. For purposes of computing its Oklahoma taxable income
52295229 under this section, the dividends -paid deduction otherwise allowed
52305230 by federal law in computing n et income of a real estate investment
52315231 trust that is subject to federal income t ax shall be added back in
52325232 computing the tax imposed by this state under this title if th e real
52335233 estate investment trust is a captive real estate investment trust.
52345234 2. For purposes of computing its Oklahoma taxable income under
52355235 this section, a taxpayer shall add back otherwise deductible rents
52365236 and interest expenses paid to a captive real estate investment trust
52375237 that is not subject to the provis ions of paragraph 1 of this
52385238 subsection. As used in this subsect ion:
52395239 a. the term “real estate investment trust ” or “REIT”
52405240 means the meaning ascribed to such term in Section 856
52415241 of the Internal Revenue Code ,
52425242 b. the term “captive real estate investment trust ” means
52435243 a real estate investment trust, the shares or
52445244 beneficial interests of which are not regularly traded
52455245 on an established securities market and more than
52465246 fifty percent (50%) of the voting power or value of
52475247
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52985298 the beneficial interest s or shares of which a re owned
52995299 or controlled, directly or in directly, or
53005300 constructively, by a single entity that is:
53015301 (1) treated as an association taxable as a
53025302 corporation under the Internal Revenue Code, and
53035303 (2) not exempt from federal income tax pursuant to
53045304 the provisions of Section 501(a) of the Internal
53055305 Revenue Code.
53065306 The term shall not include a real estate investment
53075307 trust that is intended to be regularly traded on an
53085308 established securities market, and that satisfies the
53095309 requirements of Section 856(a)( 5) and (6) of the U.S.
53105310 Internal Revenue Code by reason of Se ction 856(h)(2)
53115311 of the Internal Revenue Code,
53125312 c. the term “association taxable as a corporation” shall
53135313 not include the following entities:
53145314 (1) any real estate investme nt trust as defined in
53155315 paragraph a of this subsection other than a
53165316 “captive real estate investment trust” captive
53175317 real estate investment trust, or
53185318 (2) any qualified real estate investment trust
53195319 subsidiary under Section 856(i) of the Internal
53205320 Revenue Code, other than a qualified REIT
53215321
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53725372 subsidiary of a “captive real estate investment
53735373 trust” captive real estate investment trust, or
53745374 (3) any Listed Australian Property Trust listed
53755375 Australian property trust (meaning an Australian
53765376 unit trust registered as a “Managed Investment
53775377 Scheme” “managed investment scheme ” under the
53785378 Australian Corporations Act 2001 in which the
53795379 principal class of un its is listed on a
53805380 recognized stock exchange in Australia and is
53815381 regularly traded on an established securities
53825382 market), or an entity organized as a trust,
53835383 provided that a Listed Australian Property Trust
53845384 listed Australian property trust owns or
53855385 controls, directly or indirectly, seventy -five
53865386 percent (75%) or more of the voting power or
53875387 value of the beneficial interests or shares of
53885388 such trust, or
53895389 (4) any Qualified Foreign Entity qualified foreign
53905390 entity, meaning a corporat ion, trust, association
53915391 or partnership organized outside the laws of the
53925392 United States and which satisfies the following
53935393 criteria:
53945394 (a) at least seventy-five percent (75%) of the
53955395 entity’s total asset value at the close of
53965396
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54475447 its taxable year is represented by real
54485448 estate assets, as defined in Section
54495449 856(c)(5)(B) of the Internal Revenue Code,
54505450 thereby including shares or certificates of
54515451 beneficial interest in any real estate
54525452 investment trust, cash and cash equi valents,
54535453 and U.S. Government sec urities,
54545454 (b) the entity receives a dividend -paid
54555455 deduction comparable to Section 561 of the
54565456 Internal Revenue Code, or is exempt from
54575457 entity level tax,
54585458 (c) the entity is required to distribute at
54595459 least eighty-five percent (85%) of its
54605460 taxable income, as computed in the
54615461 jurisdiction in which it is organized, to
54625462 the holders of its shares or certificates of
54635463 beneficial interest on an annual basis,
54645464 (d) not more than ten percent (10%) of the
54655465 voting power or value in such entity is h eld
54665466 directly or indirectly or co nstructively by
54675467 a single entity or individual, or the sh ares
54685468 or beneficial interests of such entity are
54695469 regularly traded on an established
54705470 securities market, and
54715471
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55225522 (e) the entity is organized in a country wh ich
55235523 has a tax treaty with the Uni ted States.
55245524 3. For purposes of this s ubsection, the constructive ownership
55255525 rules of Section 318(a) of the Internal R evenue Code, as modified by
55265526 Section 856(d)(5) of the Intern al Revenue Code, shall apply in
55275527 determining the ownership of stock , assets, or net profits of any
55285528 person.
55295529 4. A real estate investment trust that does not become
55305530 regularly traded on an established securities market within one (1)
55315531 year of the date on which it first becomes a real estate investment
55325532 trust shall be deemed not to have been regularly traded on an
55335533 established securities market, retroactive to the date it first
55345534 became a real estate investme nt trust, and shall file an amended
55355535 return reflecting such retroactive designation for any tax year or
55365536 part year occurring du ring its initial year of status as a real
55375537 estate investment trust. For purposes of this subsection, a real
55385538 estate investment trust becomes a real estate investment trust on
55395539 the first day it has both met the requirements of Section 856 o f the
55405540 Internal Revenue Code and h as elected to be treated as a real est ate
55415541 investment trust pursuant to Section 856(c)(1) of the Internal
55425542 Revenue Code.
55435543 SECTION 3. This act shall become effective July 1, 2024.
55445544 SECTION 4. It being immediately necessary for the preservation
55455545 of the public peace, health or safety, an emergency is he reby
55465546
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55975597 declared to exist, by reason whereof thi s act shall take effect and
55985598 be in full force from and after its passage and approval.
55995599
56005600 59-2-2902 QD 12/12/2023 5:50:00 PM