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STATE OF OKLAHOMA
2nd Session of the 59th Legislature (2024)
SENATE BILL 1298 By: Rader
AS INTRODUCED
An Act relating to income tax; amending 68 O.S. 2021,
Section 2355, as last amended by Section 1, Chapter
27, 1st Extraordinary Session, O.S.L. 2023 (68 O.S.
Supp. 2023, Section 2355), which relates to tax
imposed on classes of taxpayers; modifying income tax
rate for certain tax years; amending 68 O.S. 2021,
Section 2358, as last amended by Section 1, Chapter
377, O.S.L. 2022 (68 O.S. Supp . 2023, Section 2358),
which relates to adjustments; limiting certain
personal exemption to certain tax years; modifying
amount of standard deduction for certain tax years;
updating statutory references; updating statutory
language; providing an effective date; and declaring
an emergency.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 2355, as
last amended by Section 1, Chapter 27, 1st Extraordinary Session,
O.S.L. 2023 (68 O.S. Supp. 2023, Section 2355), is amended to read
as follows:
Section 2355. A. Individuals. For all ta xable years beginning
after December 31, 1998, and before January 1, 2006, a tax is hereby
imposed upon the Oklahoma taxable income of every resi dent or
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nonresident individual, whi ch tax shall be computed at the option of
the taxpayer under one of the two following methods:
1. METHOD 1.
a. Single individuals and married individuals filing
separately not deducting federal income tax:
(1) 1/2% tax on first $1,000.00 or part thereof,
(2) 1% tax on next $1,500.00 or p art thereof,
(3) 2% tax on next $1,250.00 o r part thereof,
(4) 3% tax on next $1,150.00 or part thereof,
(5) 4% tax on next $1,300.00 or part thereof,
(6) 5% tax on next $1,500.00 or part thereof,
(7) 6% tax on next $2,300. 00 or part thereof, and
(8) (a) for taxable years beginning after December
31, 1998, and before January 1, 2002, 6.75%
tax on the remainder,
(b) for taxable years beginning on or after
January 1, 2002, and before January 1, 2004,
7% tax on the remainder, and
(c) for taxable years beginnin g on or after
January 1, 2004, 6.65% tax on the remainder.
b. Married individuals filing jointly and surviving
spouse to the extent and in the manner that a
surviving spouse is permitted t o file a joint return
under the provisions of the Internal Revenue Code and
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heads of households as defined in the Internal Revenue
Code not deducting federal income tax:
(1) 1/2% tax on first $2,000.00 or part thereof,
(2) 1% tax on next $3,000.00 or part thereof,
(3) 2% tax on next $2,500.00 or part thereof,
(4) 3% tax on next $2,300.00 or part thereof,
(5) 4% tax on next $2,400.00 or part thereof,
(6) 5% tax on next $2,800.00 or part thereof,
(7) 6% tax on next $6,000.00 or part thereof, and
(8) (a) for taxable years beginning after Decemb er
31, 1998, and before January 1, 2002, 6.75%
tax on the remainder,
(b) for taxable years beginning on or after
January 1, 2002, and before January 1, 2004,
7% tax on the remainder, and
(c) for taxable years beginning on or after
January 1, 2004, 6.65% tax on the remainder.
2. METHOD 2.
a. Single individuals and married individuals filing
separately deducting federal income tax:
(1) 1/2% tax on first $1,000.00 or part thereof,
(2) 1% tax on next $1,500.00 or part thereof ,
(3) 2% tax on next $1,250.00 or p art thereof,
(4) 3% tax on next $1,150.00 or part thereof,
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(5) 4% tax on next $1,200.00 or part thereof,
(6) 5% tax on next $1,400.00 or part thereof,
(7) 6% tax on next $1,500.00 or part thereof,
(8) 7% tax on next $1,50 0.00 or part thereof,
(9) 8% tax on next $2,000.00 or part thereof,
(10) 9% tax on next $3,500.00 or part there of, and
(11) 10% tax on the remainder.
b. Married individuals filing jointly and surviving
spouse to the extent and in the manner that a
surviving spouse is permitted to file a joi nt return
under the provisions of the Internal Revenue Code and
heads of households as defined in the Internal Revenue
Code deducting federal income tax:
(1) 1/2% tax on the first $2,000.00 or part thereof,
(2) 1% tax on the next $3,000.00 or part thereof,
(3) 2% tax on the next $2,500.00 or part thereof,
(4) 3% tax on the next $1 ,400.00 or part thereof,
(5) 4% tax on the next $1,500.00 or part thereof,
(6) 5% tax on the next $1,600.00 or part thereof,
(7) 6% tax on the next $1,250.00 or part thereof,
(8) 7% tax on the next $1,750.00 or part thereof,
(9) 8% tax on the next $3,000.00 or part thereof,
(10) 9% tax on the next $6,000.00 or part thereof, and
(11) 10% tax on the remainder.
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B. Individuals. For all taxable years beginning on or after
January 1, 2008, and ending any tax year which begins after December
31, 2015, for which the determination required pursuant to Sections
4 2355.1F and 5 Section 2355.1G of this act title is made by the
State Board of Equalization, a t ax is hereby imposed upon the
Oklahoma taxable income of every resident or nonresident individual,
which tax shall be computed as follows:
1. Single individuals and married individuals filing
separately:
(a) 1/2% tax on first $1,000.00 or part thereof,
(b) 1% tax on next $1,500.00 or part thereof,
(c) 2% tax on next $1,250.00 or par t thereof,
(d) 3% tax on next $1,150.00 or part thereof,
(e) 4% tax on next $2,300.00 or part thereof,
(f) 5% tax on next $1,500.0 0 or part thereof,
(g) 5.50% tax on the remaind er for the 2008 tax year and
any subsequent tax year unless the rate prescribed by
subparagraph (h) of this paragraph is in effect, and
(h) 5.25% tax on the remainder for the 2009 and subsequent
tax years. The decrease in the top marginal
individual income tax rate otherwise authorized by
this subparagraph shall be contingent upon t he
determination required to be made by the State Board
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of Equalization pursuant to Section 23 55.1A of this
title.
2. Married individuals filing jointly and surviving spouse to
the extent and in the manner that a surviving spouse is permitted to
file a joint return under the provisions of the Internal Revenue
Code and heads of households as defined in the Internal Revenue
Code:
(a) 1/2% tax on first $2,000.00 or part thereof,
(b) 1% tax on next $3,000.00 or part thereof,
(c) 2% tax on next $2,500.00 or par t thereof,
(d) 3% tax on next $2,300.00 or part thereof,
(e) 4% tax on next $2,400.00 or part thereof,
(f) 5% tax on next $2,800.0 0 or part thereof,
(g) 5.50% tax on the remaind er for the 2008 tax year and
any subsequent tax year unless the rate prescribed by
subparagraph (h) of this paragraph is in effect, and
(h) 5.25% tax on the remainder for the 2009 and subsequent
tax years. The decrease in the top marginal
individual income tax rate otherwise authorized by
this subparagraph shall be contingent upon t he
determination required to be made by the State Board
of Equalization pursuant to Section 23 55.1A of this
title.
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C. Individuals. For all taxable years beginning on or after
January 1, 2024, a tax is hereby imposed upon the Oklaho ma taxable
income of every resident or nonresident individual, which tax shall
be computed as follows:
1. Single individuals and married individuals filing
separately:
(a) 0.25% tax on first $1,000.00 or part thereof,
(b) 0.75% tax on next $1,500.00 or part thereof,
(c) 1.75% tax on next $1,250.00 or part thereof,
(d) 2.75% tax on next $1,150.00 or part thereof,
(e) 3.75% tax on next $2,300.00 or part thereof,
(f) 4.75% tax on the remainder.
2. Married individuals filing jointly and surviving spouse to
the extent and in the manner that a surviving spouse is permit ted to
file a joint return under the provisions of the Int ernal Revenue
Code and heads of households as defined in the Internal Revenue
Code:
(a) 0.25% tax on first $2,000.00 or part thereof,
(b) 0.75% tax on next $3,000.00 or part thereof,
(c) 1.75% tax on next $2,500.00 or part thereof,
(d) 2.75% tax on next $2,300.00 or part thereof,
(e) 3.75% tax on next $4,600.00 or part thereof,
(f) 4.75% tax on the remainder four and fifty hundredths
percent (4.50%).
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No deduction for federal income taxes paid shall be allowed to
any taxpayer to arrive at taxable income.
D. Nonresident aliens. In lieu of the rates set forth in
subsection A above, there shall be imposed on nonresident aliens, as
defined in the Internal Revenue Code , a tax of eight percent (8%)
instead of thirty percent (30%) as used in the Internal Revenue
Code, with respect to the Oklahoma taxable income of such
nonresident aliens as det ermined under the provision of t he Oklahoma
Income Tax Act.
Every payer of amounts covered by this subsection shall deduct
and withhold from such amounts paid each payee an amount equal to
eight percent (8%) thereof. Every payer required to deduct and
withhold taxes under this subsection shall for each quarterly period
on or before the last day of the month following the close of each
such quarterly period, pay over the amount so withheld as taxes to
the Oklahoma Tax Commission, and shall file a return wit h each such
payment. Such return sh all be in such form as t he Tax Commission
shall prescribe. Every payer required under this subsection to
deduct and withhold a tax from a payee shall, as to the total
amounts paid to each payee during the calend ar year, furnish to such
payee, on or before January 31 , of the succeeding year, a writ ten
statement showing the name of the payer, the name of the payee and
the payee’s Social Security account number, if any, the total amount
paid subject to taxation, and the tot al amount deducted and withheld
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as tax and such other inform ation as the Tax Commission may require.
Any payer who fails to withhold or pay to the Tax Commission any
sums herein required to be withheld or paid shall be personally and
individually liable therefor to the State of Oklahoma this state.
E. Corporations. For all taxable years beginning after
December 31, 2021, a tax is hereby imposed upon the Oklaho ma taxable
income of every corporation doing busi ness within this state or
deriving income from sources within this state in an amou nt equal to
four percent (4%) thereof.
There shall be no additional Oklahoma income tax imposed on
accumulated taxable income or on undistributed personal holding
company income as those terms are defined in the Internal Revenue
Code.
F. Certain foreign corporations. In lieu of the tax imposed in
the first paragraph of subsection D of this section, for all taxable
years beginning after December 31, 2021, there shall be imposed on
foreign corporations, as defined in the Internal Revenue Code, a tax
of four percent (4%) instead of thirty percent (30%) as used in the
Internal Revenue Code, where such income is received from sources
within Oklahoma this state, in accordance with the provisions of the
Internal Revenue Code an d the Oklahoma Income Tax Act.
Every payer of amounts covered by this subsectio n shall deduct
and withhold from such amounts paid each payee an amount equal to
four percent (4%) thereof. Every payer requ ired to deduct and
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withhold taxes under this subsect ion shall for each quarterly period
on or before the last day of the month following the close of each
such quarterly period, pay over the amount so withheld as taxes to
the Tax Commission, and shall file a return with each such payment.
Such return shall be in such form as the Tax Com mission shall
prescribe. Every payer required u nder this subsection to deduct and
withhold a tax from a payee shall, as to the t otal amounts paid to
each payee during the c alendar year, furnish to such payee, on or
before January 31, of the succeeding year, a written statement
showing the name of the payer, the name of the payee and the payee ’s
Social Security account number, if any, the total amounts paid
subject to taxation, the total amount deducted and withheld as tax
and such other information as the Tax Commission may require. Any
payer who fails to withhold or pay to the Tax Commis sion any sums
herein required to be withheld or paid shall be personally and
individually liable therefor to the State of Oklahoma .
G. Fiduciaries. A tax is hereby imposed up on the Oklahoma
taxable income of every trust and estate at the same rates as are
provided in subsection B or C of this section for single
individuals. Fiduciaries are not allowed a deduction for any
federal income tax paid.
H. Tax rate tables. For all taxable years beginning after
December 31, 1991, in lieu of the tax imposed by subsection A, B or
C of this section, as applicable there is hereby imposed for each
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taxable year on the taxabl e income of every individual, whose
taxable income for such taxabl e year does not exceed the ceiling
amount, a tax determined under tables, applicable to such taxable
year which shall be prescribed by the Tax Commission and which shall
be in such form as it determines appropriate. In the table so
prescribed, the amounts of the tax shall be computed on the basis of
the rates prescribed by subsection A, B or C of this section. For
purposes of this subsection, the term “ceiling amount” means, with
respect to any taxpayer, the amount dete rmined by the Tax Commission
for the tax rate category in which such taxpayer falls.
SECTION 2. AMENDATORY 68 O.S. 2021, Section 2358, as
last amended by Section 1, Chapter 377, O.S.L. 2022 (68 O.S. Supp.
2023, Section 2358), is a mended to read as follows:
Section 2358. For all tax years beginnin g after December 31,
1981, taxable income and adjusted gross income shall be adjusted to
arrive at Oklahoma taxable income and Oklahoma adjusted gross income
as required by this section.
A. The taxable income of any t axpayer shall be adjusted to
arrive at Oklahoma taxable income for corporations and Oklahoma
adjusted gross income for individuals, as foll ows:
1. There shall be added interest income on obligations of any
state or political subdivision thereto which i s not otherwise
exempted pursuant to othe r laws of this state, to the extent that
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such interest is not included in taxable income and adjusted gross
income.
2. There shall be deducted amounts included in such inco me that
the state is prohibited from taxing b ecause of the provisions of the
Federal Constitution, the State Constitution, federal laws or laws
of Oklahoma.
3. The amount of any feder al net operating loss deduction shall
be adjusted as follows:
a. For carryovers and car rybacks to taxable years
beginning before January 1, 1981, the amoun t of any
net operating loss deduction allowed to a taxpayer for
federal income tax purposes shall be reduced to an
amount which is the same portion thereof as the loss
from sources within this state, as determined purs uant
to this section and Section 2362 of this ti tle, for
the taxable year in which such loss is sustained is of
the total loss for such yea r;
b. For carryovers and carrybacks to taxable years
beginning after December 31, 1980, the amount of any
net operating loss deduction allowed for the taxa ble
year shall be an amount equal to the aggregate of the
Oklahoma net operating loss carryovers and carrybacks
to such year. Oklahoma net operating losses shall be
separately determined by reference to Section 172 of
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the Internal Revenue Code, 26 U.S.C., Section 1 72, as
modified by the Oklahoma Income Tax Act, Section 2351
et seq. of this title, and shall be allowed without
regard to the existence of a federal net operating
loss. For tax years beginning after Dece mber 31,
2000, and ending before January 1, 2008, the years to
which such losses may be carried shall be determined
solely by reference to Section 172 of the Internal
Revenue Code, 26 U.S.C., Section 172, with the
exception that the terms “net operating loss” and
“taxable income” shall be replaced with “Oklahoma net
operating loss” and “Oklahoma taxable income ”. For
tax years beginning after Decem ber 31, 2007, and
ending before January 1, 2009, years to which such
losses may be carried back shall be limited to two (2)
years. For tax years beginn ing after December 31,
2008, the years to which such losses may be carried
back shall be determined solely by reference to
Section 172 of the Internal Revenue Code, 26 U.S.C .,
Section 172, with the exception that the t erms “net
operating loss” and “taxable income” shall be replaced
with “Oklahoma net operating loss ” and “Oklahoma
taxable income”.
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4. Items of the following nature shall be allocated as
indicated. Allowable deductions attrib utable to items separately
allocable in subparagraphs a, b and c of this paragraph, whether or
not such items of income were actually received, shall be allocated
on the same basis as those items:
a. Income from real and tangible personal pr operty, such
as rents, oil and mining product ion or royalties, and
gains or losses from sales of such property, shall be
allocated in accordance with the situs of such
property;
b. Income from intangible personal property, such as
interest, dividends, patent or copyright royalties,
and gains or losses from sales of such property, shall
be allocated in accordance with the domiciliary situs
of the taxpayer, except that:
(1) where such property has acquired a nonunitary
business or commercial situs apart from the
domicile of the taxpayer such income shal l be
allocated in accordance with such business or
commercial situs; interest income from
investments held to generate working ca pital for
a unitary business enterprise shall be included
in apportionable income; a resident tru st or
resident estate shall be treated as having a
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separate commercial or business situs insofar as
undistributed income is concerned, but shall not
be treated as having a separate commercial or
business situs insofar as distributed income i s
concerned,
(2) for taxable years beginning after December 31,
2003, capital or ordinary gai ns or losses from
the sale of an ownership interest in a publicly
traded partnership, as defined by Section 7704(b)
of the Internal Revenue Code, shall be allocated
to this state in the ratio of the original cost
of such partnership’s tangible property in this
state to the original cost of such partnership ’s
tangible property everywhere, as determined at
the time of the sale; if more than fifty percent
(50%) of the value of the partnership’s assets
consists of intangible assets, capital or
ordinary gains or losses from the sale of an
ownership interest in the partnership shall be
allocated to this state in accordance with the
sales factor of the partnership for its first
full tax period immediately preceding its tax
period during which the ownershi p interest in the
partnership was sold; the provisions of this
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division shall only apply if the capital or
ordinary gains or losses from the sale of an
ownership interest in a partnership do not
constitute qualifying g ain receiving capital
treatment as defined in su bparagraph a of
paragraph 2 of subsection F of this section,
(3) income from such pro perty which is required to be
allocated pursuant to the provisions of paragraph
5 of this subsection shall be allocated as herein
provided;
c. Net income or loss from a business activity which is
not a part of business carried on within or without
the state of a unitary character sh all be separately
allocated to the state in which s uch activity is
conducted;
d. In the case of a manufacturing or processing
enterprise the business of which in Oklahoma this
state consists solely of marketing its products by:
(1) sales having a situs without this state, shipped
directly to a point from without the stat e to a
purchaser within the state, commonly known as
interstate sales,
(2) sales of the product stored in public warehouses
within the state pursuant to “in transit”
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tariffs, as prescribed and allowed by the
Interstate Commerce Commission, t o a purchaser
within the state,
(3) sales of the product stored in public warehouses
within the state where the shipment to such
warehouses is not covered by “in transit”
tariffs, as prescribed and allowed by the
Interstate Commerce Commission, to a purchaser
within or without the state,
the Oklahoma net income shall, at the option of the
taxpayer, be that portion of the total net income of
the taxpayer for federal income tax purposes derived
from the manufacture and/or processing and sales
everywhere as determined by the ratio of the sales
defined in this section made to the purchaser within
the state to the total sales everywhere. T he term
“public warehouse” as used in this subparagraph means
a licensed public warehouse, the principal business of
which is warehousing me rchandise for the public;
e. In the case of insurance companies, Oklahoma taxab le
income shall be taxable income of the taxpayer for
federal tax purposes, as adjusted for the adjustments
provided pursuant to the provisions of paragraphs 1
and 2 of this subsection, apportioned as follows:
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(1) except as otherwise provided by division (2) of
this subparagraph, taxable inco me of an insurance
company for a taxable year shall be apportioned
to this state by multiplying such income by a
fraction, the numerator of which is the direct
premiums written for insurance on property or
risks in this state, and the denominator of which
is the direct premiums written for insurance on
property or risks everywhere. For purposes of
this subsection, the term “direct premiums
written” means the total amount of direct
premiums written, assessments and annuity
considerations as reported for the taxable year
on the annual statement filed by the company with
the Insurance Commissioner in the form approved
by the National Association of Insurance
Commissioners, or such other form as may be
prescribed in lieu the reof,
(2) if the principal source of premiums written by an
insurance company consists of premiums for
reinsurance accepted by it, the taxable income of
such company shall be apportioned to this state
by multiplying such income by a fraction, the
numerator of which is the sum of (a) direct
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premiums written for insurance on property or
risks in this state, plus (b) premiums written
for reinsurance accepted in respect of property
or risks in this state, and the denominator of
which is the sum of (c) direct pr emiums written
for insurance on property or risks everywhere,
plus (d) premiums written for reinsurance
accepted in respect of property or risks
everywhere. For purposes of this paragraph,
premiums written for reinsurance accepted in
respect of property or risks in this state,
whether or not otherwise determinable, may at the
election of the company be determined on the
basis of the proportion which premiums written
for insurance accepted from companies
commercially domiciled in Oklahoma this state
bears to premiums written for reinsurance
accepted from all sources, or alternatively in
the proportion which the sum of the direct
premiums written for insurance on pro perty or
risks in this state by each ceding compa ny from
which reinsurance is accepted bears to the sum of
the total direct premiums written by each such
ceding company for the taxable year.
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5. The net income or loss remaining after the separate
allocation in paragraph 4 of this subsection, being that which is
derived from a unitary busines s enterprise, shall be apportioned to
this state on the basis of the arithmetical average of three factors
consisting of property, payroll and sales or gross revenue
enumerated as subparagraphs a, b and c of this parag raph. Net
income or loss as used in this paragraph includes that derived from
patent or copyright royalties, purchase discounts, and interest on
accounts receivable relating to or arising from a business activity,
the income from which is apportioned pursuant to this subsection,
including the sale or other disposition of such property and any
other property used in the unitary enterprise. Deductions used in
computing such net income or loss shall not includ e taxes based on
or measured by income. Provided , for corporations whose property
for purposes of the tax imposed by Section 2355 of this title has an
initial investment cost equaling or exc eeding Two Hundred Million
Dollars ($200,000,000.00) and such investment is made on or after
July 1, 1997, or for corporations which expand their proper ty or
facilities in this state and such expansion has an investment cost
equaling or exceeding Two Hundred Million Dollars ($200,000,000.00)
over a period not to exceed three (3) years, and such expansion is
commenced on or after January 1, 2000, the three factors shall be
apportioned with property and payroll, each comprising twenty -five
percent (25%) of the apportionment factor and sales comprising fifty
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percent (50%) of the apportion ment factor. The apportionment
factors shall be computed as follows:
a. The property factor is a fraction, the numerator of
which is the average value of the taxpayer ’s real and
tangible personal property owned or rented and used in
this state during the tax period and the denominator
of which is the average value of all the taxpayer ’s
real and tangible personal property everywhere owned
or rented and used during the tax period.
(1) Property, the income from which is separately
allocated in paragraph 4 of this subsection,
shall not be included in determining this
fraction. The numerator of the fraction shall
include a portion of the investment in
transportation and other equipment having no
fixed situs, such as rolling stock, buses, trucks
and trailers, including machinery and equipment
carried thereon, airplanes, salespersons ’
automobiles and other simi lar equipment, in the
proportion that miles traveled in Oklahoma this
state by such equipment bears to total miles
traveled,
(2) Property owned by the taxpa yer is valued at its
original cost. Property rented by the taxpayer
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is valued at eight times the net annual rental
rate. Net annual rental rate is the annual
rental rate paid by the taxpayer, less any annual
rental rate received by the tax payer from
subrentals,
(3) The average value of pro perty shall be determined
by averaging the values at the beginning and
ending of the tax period but the Oklahoma Tax
Commission may require the averaging of monthly
values during the tax period if reasonably
required to reflect properly the average value of
the taxpayer’s property;
b. The payroll factor is a fraction, t he numerator of
which is the total compensation for services rendered
in the state during the tax period, and the
denominator of which is th e total compensation for
services rendered everywhe re during the tax period.
“Compensation”, as used in this subsection , means
those paid-for services to the exten t related to the
unitary business but does not include officers ’
salaries, wages and other compensation.
(1) In the case of a transportation enterprise, the
numerator of the fraction sha ll include a portion
of such expenditure in connection with employees
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operating equipment over a fixed route, such as
railroad employees, airline pilots, or bus
drivers, in this state only a part of the time,
in the proportion that mileage traveled in
Oklahoma this state bears to total mileage
traveled by such employees,
(2) In any case the numerator of the fraction shall
include a portion of such expenditures in
connection with itinerant employees, such as
traveling salespersons, in this state only a part
of the time, in the proportion tha t time spent in
Oklahoma this state bears to total time spent in
furtherance of the enterprise by such employees;
c. The sales factor is a frac tion, the numerator of which
is the total sales or gross revenue of the taxpayer in
this state during the tax period, and the denomina tor
of which is the total sales or gross revenue of the
taxpayer everywhere dur ing the tax period. “Sales”,
as used in this subsection, does not include sales or
gross revenue which are separately all ocated in
paragraph 4 of this subsection.
(1) Sales of tangible persona l property have a situs
in this state if the property is delivered or
shipped to a purchaser other than th e United
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States government, within t his state regardless
of the FOB point or other conditions of the sale;
or the property is shipped f rom an office, store,
warehouse, factory or other place of storage in
this state and (a) the purchaser is the United
States government or (b) the taxpayer is not
doing business in the state of the des tination of
the shipment.
(2) In the case of a railroad or interurban r ailway
enterprise, the numerator of the fraction shall
not be less than the allocation of revenues to
this state as shown in its annual report to the
Corporation Commission.
(3) In the case of an airline, truck or bus
enterprise or freight c ar, tank car, refrigerator
car or other railroad equipment enterprise, the
numerator of the fraction shall include a portion
of revenue from interstate transportation in the
proportion that interstate mileage traveled in
Oklahoma this state bears to total interstate
mileage traveled.
(4) In the case of an oil, gasoline or gas pipeline
enterprise, the numerator of the fractio n shall
be either the total of traff ic units of the
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enterprise within Oklahoma this state or the
revenue allocated to Oklahoma this state based
upon miles moved, at the option of the taxpayer,
and the denominator of which shall be the total
of traffic units of the enterprise or the revenue
of the enterprise everywhere as appropriate to
the numerator. A “traffic unit” is hereby
defined as the transportation for a distance of
one (1) mile of one (1) barrel of oil, one (1)
gallon of gasoline or one thousand ( 1,000) cubic
feet of natural or casi nghead gas, as the case
may be.
(5) In the case of a telephone or telegraph or other
communication enterprise, the numerator of the
fraction shall include that portion of the
interstate revenue as is allocated pursuant t o
the accounting procedures prescribed by the
Federal Communications Commission ; provided that
in respect to each corporation or business entity
required by the Federal Communications Commission
to keep its books and records in accordance with
a uniform system of accounts prescribed by such
Commission, the intrastate net income shall be
determined separately in the manner provided by
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such uniform system of accounts and o nly the
interstate income shall be subject to allocation
pursuant to the provisions of t his subsection.
Provided further, that the gross revenue factors
shall be those as are determined pursuant to the
accounting procedures prescribed by the Fed eral
Communications Commission.
In any case where the apportionment of the three factors
prescribed in this paragraph attributes to Oklahoma this state a
portion of net income of the enterprise out of all approp riate
proportion to the property owned and/or business transacted within
this state, because of the fact that one or more of the factors so
prescribed are not employed to any appreciable extent in furtherance
of the enterprise; or because one or more factor s not so prescribed
are employed to a considerable exte nt in furtherance of the
enterprise; or because of other reasons, the Tax Commission is
empowered to permit, after a showin g by taxpayer that an excessive
portion of net income has been attributed to Oklahoma this state, or
require, when in its judgment an insufficient portion of net income
has been attributed to Oklahoma this state, the elimination,
substitution, or use of additional factors, or reduction or increase
in the weight of such prescribed fa ctors. Provided, however, that
any such variance from such prescribed factor s which has the effect
of increasing the portion of net income at tributable to Oklahoma
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this state must not be inherently arbitrary, and application of the
recomputed final apportionment to the net income of the enterprise
must attribute to Oklahoma this state only a reasonable portion
thereof.
6. For calendar years 19 97 and 1998, the owner of a new or
expanded agricultural commodity processing f acility in this state
may exclude from Oklahoma taxable income, or in the case of an
individual, the Oklahoma adjusted gross income, f ifteen percent
(15%) of the investment by t he owner in the new or expanded
agricultural commodity processing facility. For calendar year 1999,
and all subsequent years, the percentage, not to exceed fifteen
percent (15%), available to the owner of a new or expanded
agricultural commodity processin g facility in this state claiming
the exemption shall be adjusted annually so t hat the total estimated
reduction in tax liability does not exceed One Million Dollars
($1,000,000.00) annually. The Tax Commission s hall promulgate rules
for determining the p ercentage of the investment which ea ch eligible
taxpayer may exclude. The exclusion provided by this paragraph
shall be taken in the taxable year when the i nvestment is made. In
the event the total reduction in tax liabil ity authorized by this
paragraph exceeds One Million Dollars ($1,000,000.00) in any
calendar year, the Tax Commi ssion shall permit any excess over One
Million Dollars ($1,000,000.00) and shall factor such excess into
the percentage for subsequent years. Any amount of the exemption
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permitted to be excluded pursuant to the p rovisions of this
paragraph but not used in any year may be carried forward as an
exemption from income pursuant to the p rovisions of this paragraph
for a period not exceeding six (6) yea rs following the year in which
the investment was originally made.
For purposes of this paragraph:
a. “Agricultural commodity processing facility ” means
building buildings, structures, fixtures and
improvements used or operated primarily for the
processing or production of marketable prod ucts from
agricultural commodities. The term shall also mean a
dairy operation that requires a depreciable investment
of at least Two Hundred Fifty Thousand Dollars
($250,000.00) and which produces milk from dairy cows.
The term does not include a facili ty that provides
only, and nothing more than, storage, cleaning, drying
or transportation of agricultural commodi ties, and
b. “Facility” means each part of the facility which is
used in a process primarily for:
(1) the processing of agricultural commoditie s,
including receiving or storing ag ricultural
commodities, or the production of milk at a dairy
operation,
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(2) transporting the agricultural commodities or
product before, during or after the processing,
or
(3) packaging or otherwis e preparing the product for
sale or shipment.
7. Despite any provision to the contrary in paragraph 3 of this
subsection, for taxable years beginning after De cember 31, 1999, in
the case of a taxpayer which has a farming loss, such farming loss
shall be considered a net operati ng loss carryback in accordance
with and to the extent of the Internal Revenue Code, 26 U.S.C.,
Section 172(b)(G). However, the amount of the net operating loss
carryback shall not exceed the lesser of:
a. Sixty Thousand Dollars ($6 0,000.00), or
b. the loss properly shown on Schedule F of the Internal
Revenue Service Form 1040 reduc ed by one-half (1/2) of
the income from all other sources other than reflected
on Schedule F.
8. In taxable years beginning after December 31, 1995, all
qualified wages equal t o the federal income tax credit set forth in
26 U.S.C.A., Section 45A, shall be deducted from taxable income.
The deduction allowed pursuant to this paragraph shall o nly be
permitted for the tax years in which the federal tax credit pursuant
to 26 U.S.C.A., Section 45A, is allowed. For purposes of this
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paragraph, “qualified wages” means those wages used to calculate the
federal credit pursuant to 26 U.S.C.A., Section 45A.
9. In taxable years beginning after December 31, 2 005, an
employer that is eligible for and utilizes the Safety Pays OS HA
Consultation Service provided by the Oklahoma Department of Labor
shall receive an exemption from taxable income in the amount o f One
Thousand Dollars ($1,000.00) for the tax year that the servi ce is
utilized.
10. For taxable years beginning on or after January 1, 2010,
there shall be added to Oklahoma taxable income an amount equal to
the amount of deferred income not included in such taxable income
pursuant to Section 108(i)(1) of th e Internal Revenue Code of 1986
as amended by Section 1231 of the Ame rican Recovery and Reinvestment
Act of 2009 (P.L. No. 111 -5). There shall be subtracted from
Oklahoma taxable income an amount equ al to the amount of deferred
income included in such taxable incom e pursuant to Section 108(i)(1)
of the Internal Revenue Code by Section 1231 of the American
Recovery and Reinvestment Act of 2009 (P.L. No. 111 -5).
11. For taxable years beginning on or after January 1, 2019,
there shall be subtracted from Okla homa taxable income or adjusted
gross income any item of income or ga in, and there shall be added to
Oklahoma taxable income or adjusted gross income any item of loss or
deduction that in the absence of an election pursuant to the
provisions of the Pass -Through Entity Tax Equity Act of 20 19 would
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be allocated to a member or to an indirect member of an electing
pass-through entity pursuant to Section 2351 et seq. of this title,
if (i) the electing pass -through entity has accounted for such item
in computing its Oklahoma net entity income or loss pursuant to the
provisions of the Pass-Through Entity Tax Equity Act of 2019, and
(ii) the total amount of tax attributable to any resulting Oklahoma
net entity income has been paid. The Oklahoma Tax Commission shall
promulgate rules for the reporti ng of such exclusion to direct and
indirect members of the electing pass -through entity. As used in
this paragraph, “electing pass-through entity”, “indirect member”,
and “member” shall be defined in the same manner as pre scribed by
Section 2355.1P-2 of this title. Notwithstanding the appl ication of
this paragraph, the adjusted tax basis of any ownership interest in
a pass-through entity for purposes of Section 2351 e t seq. of this
title shall be equal to its adjusted tax basis for federal income
tax purposes.
B. 1. The taxable income of any corporation shall be further
adjusted to arrive at Oklahoma taxable income, except those
corporations electing treatment as provided in subc hapter S of the
Internal Revenue Code, 26 U .S.C., Section 1361 et seq., and Section
2365 of this title, deductio ns pursuant to the provisions of the
Accelerated Cost Recovery System as defined and allowed in the
Economic Recovery Tax Act of 19 81, Public Law 97-34, 26 U.S.C.,
Section 168, for depreciation of assets placed into serv ice after
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December 31, 1981, shall not be allowed in calculating Oklahoma
taxable income. Such corporations shall be allowed a deduction for
depreciation of assets placed into ser vice after December 31, 1981,
in accordance with provisions of the Internal Revenue Code, 26
U.S.C., Section 1 et seq., in effect immediately prior to the
enactment of the Accelerated Cost Recovery System. The Oklahoma tax
basis for all such assets placed into service after December 31,
1981, calculated in this section shall be r etained and utilized for
all Oklahoma income tax purposes through the final dis position of
such assets.
Notwithstanding any other provisio ns of the Oklahoma Income Tax
Act, Section 2351 et seq. of this title, or of the Inte rnal Revenue
Code to the contrary , this subsection shall control calc ulation of
depreciation of assets placed into service after December 31, 1981,
and before January 1, 1983.
For assets placed in ser vice and held by a corporation in which
accelerated cost recovery system the Accelerated Cost Recovery
System was previously disallowed, an adjustment to taxable income is
required in the first taxable year beginning after December 31,
1982, to reconcile the basis of such assets to the basis allowed in
the Internal Revenue Code. The purpose o f this adjustment is to
equalize the basis and allowance for depreciation accounts between
that reported to the Internal Revenue Service and that reported to
Oklahoma this state.
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2. For tax years beginning on or af ter January 1, 2009, and
ending on or before December 31, 2009 , there shall be added to
Oklahoma taxable income any amou nt in excess of One Hundred Seventy -
five Thousand Dollars ($175,000.00) which has been deducted as a
small business expense under Internal Revenue Code, Section 179 as
provided in the American Recovery and Reinves tment Act of 2009.
C. 1. For taxable years beginning after December 31, 1987, the
taxable income of any corporation shall be further adjusted to
arrive at Oklahoma taxable incom e for transfers of technology to
qualified small businesses lo cated in Oklahoma this state. Such
transferor corporation shall be allowed an exemption from taxable
income of an amount equal to the amount of royalty paymen t received
as a result of such transfer; provided, however, such amount shal l
not exceed ten percent (10%) of the amount of gross proceeds
received by such transferor corporation as a result of the
technology transfer. Such exemption shall be allowed for a period
not to exceed ten (10) years from the date of receipt of the first
royalty payment accru ing from such transfer. No exemption may be
claimed for transfers of technology to qualified small businesses
made prior to January 1, 1988.
2. For purposes of this subsection:
a. “Qualified small business ” means an entity, whether
organized as a corporation, partnership, or
proprietorship, organized for profit with its
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principal place of business located within this state
and which meets the following criteria:
(1) Capitalization of not more than Two Hun dred Fifty
Thousand Dollars ($250,000.00),
(2) Having at least fifty percent (50%) of its
employees and assets located in Oklahoma this
state at the time of the transfer, and
(3) Not a subsidiary or affiliate of the transferor
corporation;
b. “Technology” means a proprietary process, f ormula,
pattern, device or compilati on of scientific or
technical information which is not in the public
domain;
c. “Transferor corporation ” means a corporation which is
the exclusive and undisputed owner of the technology
at the time the transfer is made; and
d. “Gross proceeds” means the total amount of
consideration for the transf er of technology, whether
the consideration is in money or otherwise.
D. 1. For taxable years beginning after December 31, 2005, the
taxable income of any corporation, estate or trust, shall be further
adjusted for qualifying gains receiving capital treatment. Such
corporations, estates or trusts shall be allowed a deduction from
Oklahoma taxable income for the amount of qualifying gains receiving
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capital treatment earned by the corporation, estat e or trust during
the taxable year and included in the fed eral taxable income of such
corporation, estate or trust.
2. As used in this subsection:
a. “qualifying gains receiving capital treatment ” means
the amount of net capital gains , as defined in Section
1222(11) of the Internal Revenue Code, included in the
federal income tax return of the corporation, estate
or trust that result from:
(1) the sale of real property or tangible personal
property located within Oklahoma this state that
has been directly or indirectly owned by the
corporation, estate or trust fo r a holding period
of at least five (5) years prior to the date of
the transaction from which such net capital gains
arise,
(2) the sale of stock or on the sale of an ownership
interest in an Oklahoma company, lim ited
liability company, or partnership where such
stock or ownership interest has been directly or
indirectly owned by the corporation, estate or
trust for a holding period of at least three (3)
years prior to the date of the transaction fro m
which the net capital gains arise, or
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(3) the sale of real property, tangible personal
property or intangible personal property located
within Oklahoma this state as part of the sale of
all or substantially all of the assets of an
Oklahoma company, limited liability co mpany, or
partnership where such property has been directly
or indirectly owned by such entity owned by the
owners of such entity, and used in or derived
from such entity for a period of at least three
(3) years prior to the date of the transaction
from which the net capital gains arise,
b. “holding period” means an uninterrupted period of
time. The holding period shall include any additional
period when the property was held by another
individual or entity, if such addi tional period is
included in the taxpayer’s holding period for the
asset pursuant to the Internal Revenue Code,
c. “Oklahoma company”, “limited liability company ”, or
“partnership” means an entity whose primary
headquarters have been located in Oklahoma this state
for at least three (3) uninterrupted years prior to
the date of the transaction from which the net capital
gains arise,
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d. “direct” means the taxpayer directly owns the asset,
and
e. “indirect” means the taxpayer owns an interest in a
pass-through entity (or chain of pass-through
entities) that sells the asset that gives rise to the
qualifying gains receiving capital treatment.
(1) With respect to sales of real property or
tangible personal property located within
Oklahoma this state, the deduction described in
this subsection shall not apply unless the pass -
through entity that makes the sale has held the
property for not less than five (5) uninterrupted
years prior to the date of the transaction that
created the capital gain, and each pass -through
entity included in the chain of owne rship has
been a member, partner, or sharehol der of the
pass-through entity in the tier immediately below
it for an uninterrupted period of not less than
five (5) years.
(2) With respect to sales of stock or ownership
interest in or sales of all or substantially all
of the assets of an Oklahoma com pany, limited
liability company, or partnership, the deduction
described in this subsection shall not apply
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unless the pass-through entity that makes the
sale has held the stock or ownership interest or
the assets for not less than three (3)
uninterrupted years prior to the date of the
transaction that created the capital gain, and
each pass-through entity included in the chain of
ownership has been a member, partn er or
shareholder of the pass-through entity in the
tier immediately below it for an uninterru pted
period of not less than three (3) years.
E. The Oklahoma adjusted gross income of any individual
taxpayer shall be fu rther adjusted as follows to arrive at Oklahoma
taxable income:
1. a. In For tax year 2023 and preceding tax years, in the
case of individuals, there shall be added or deducted,
as the case may be, the difference necessary to allow
personal exemptions of One Thousand Dollars
($1,000.00) in lieu of the persona l exemptions allowed
by the Internal Revenue Code.
b. There For tax year 2023 and preceding tax years, there
shall be allowed an additional exemption of One
Thousand Dollars ($1,000.00) for each taxpayer or
spouse who is blind at the close of the tax year. For
purposes of this subparagraph, an individual is blind
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only if the central visual acuity of the individual
does not exceed 20/200 in the be tter eye with
correcting lenses, or if the visual acuity of the
individual is greater than 20/200, but is accomp anied
by a limitation in the fields of vision such that the
widest diameter of the visual field subt ends an angle
no greater than twenty (20) degrees.
c. There For tax years 1988 through 2023, there shall be
allowed an additional exemption of One Thousand
Dollars ($1,000.00) for each taxpaye r or spouse who is
sixty-five (65) years of age or older at the close of
the tax year based upon the filing status and federal
adjusted gross incom e of the taxpayer. Taxpayers wi th
the following filing status may claim this exemption
if the federal adjusted gross income does not exceed:
(1) Twenty-five Thousand Dollars ($25,000.00) if
married and filing jointly;
(2) Twelve Thousand Five Hundred Dollars ($12,500.00)
if married and filing sep arately;
(3) Fifteen Thousand Dollars ($15,000.00) if single;
and
(4) Nineteen Thousand Dollars ($19,000.00) if a
qualifying head of household.
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Provided, for taxable years beginning after December
31, 1999, amounts included in the calculation of
federal adjusted gross income pursuant to the
conversion of a traditional individual retirement
account to a Roth indivi dual retirement account shall
be excluded from federal adjusted gross income for
purposes of the income thresholds provided in this
subparagraph.
2. a. For taxable years beginni ng on or before December 31,
2005, in the case of individuals who use the standard
deduction in determining taxable income, there shall
be added or deducted, as the case may be, the
difference necessary to allow a s tandard deduction in
lieu of the standard deduction allowed by the Internal
Revenue Code, in an amount equal to the larg er of
fifteen percent (15%) of the Oklah oma adjusted gross
income or One Thousand Dollars ($1,000.00), but not to
exceed Two Thousand Dollars ($2, 000.00), except that
in the case of a married individual filing a s eparate
return such deduction shall be the larger of fifteen
percent (15%) of such Oklahoma adjusted gross income
or Five Hundred Dollars ($500.00) , but not to exceed
the maximum amount of One Thousand Dollars
($1,000.00).
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b. For taxable years beginning on or after January 1,
2006, and before Janua ry 1, 2007, in the case of
individuals who use the standard deduction in
determining taxable income, there shall be added o r
deducted, as the case may be, the difference necessa ry
to allow a standard deduction in lieu of the standard
deduction allowed by the Internal Revenue Code, in an
amount equal to:
(1) Three Thousand Dollars ($3,000.00), if the filing
status is married filing joint, h ead of household
or qualifying widow; or
(2) Two Thousand Dollars ($2,000.00), if the filing
status is single or married filing separate.
c. For the taxable year beginning on January 1, 2007, and
ending December 31, 2007, in the case of indivi duals
who use the standard deduction in determining ta xable
income, there shall be added o r deducted, as the case
may be, the difference necessary to allow a standard
deduction in lieu of the standard deduction allowed by
the Internal Revenue Code, in an amount equal t o:
(1) Five Thousand Five Hundred Dollars ($5,500.00),
if the filing status is married filing joint or
qualifying widow; or
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(2) Four Thousand One Hundred Twenty -five Dollars
($4,125.00) for a head of household; or
(3) Two Thousand Seven Hundre d Fifty Dollars
($2,750.00), if the filing status is s ingle or
married filing separate.
d. For the taxable year beginning on January 1, 2008, and
ending December 31, 2008, in the case of individuals
who use the standard deduction in dete rmining taxable
income, there shall be added or deducted, as the case
may be, the difference necessary to allow a standard
deduction in lieu of the stan dard deduction allowed by
the Internal Revenue Code, in an amount equal to:
(1) Six Thousand Five Hundred Dollars ($6,500.0 0), if
the filing status is married filing joint or
qualifying widow, or
(2) Four Thousand Eight Hundred Seventy -five Dollars
($4,875.00) for a head of household, or
(3) Three Thousand Two Hundred Fifty Dollars
($3,250.00), if the filing status is single or
married filing separate.
e. For the taxable year beg inning on January 1, 2009, and
ending December 31, 2009, in the case of individuals
who use the standard deduction in d etermining taxable
income, there shall be added or deducted, as the case
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may be, the difference necessary to allow a standard
deduction in lieu of the standard deduction all owed by
the Internal Revenue Code, in an amount equal to:
(1) Eight Thousand Five Hundred Dollars ($8,500.00),
if the filing status is married fili ng joint or
qualifying widow, or
(2) Six Thousand Three Hundred Seventy -five Dollars
($6,375.00) for a head of household, or
(3) Four Thousand Two Hundr ed Fifty Dollars
($4,250.00), if the fil ing status is single or
married filing separate.
Oklahoma adjusted gross income sha ll be increased by
any amounts paid for motor vehicle excise taxes which
were deducted as allowed by the Internal Revenue Code.
f. For taxable years beginning on or after January 1,
2010, and ending on December 31, 2016, in the case of
individuals who use the standard deduction in
determining taxable income, there shall be added or
deducted, as the case may be, the difference necessary
to allow a standard deduction equal to t he standard
deduction allowed by the Internal Revenue Code, based
upon the amount and filing status prescr ibed by such
Code for purposes of filing federal individual income
tax returns.
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g. For taxable years beginning on or after January 1,
2017 tax years 2017 throu gh 2023, in the case of
individuals who use the standard deduction in
determining taxable income, there shall be ad ded or
deducted, as the case may be, the difference necessary
to allow a standard deduction in lieu of the standard
deduction allowed by the Internal Revenue Co de, as
follows:
(1) Six Thousand Three Hundred Fifty Dollars
($6,350.00) for single or married filing
separately,
(2) Twelve Thousand Seven Hundr ed Dollars
($12,700.00) for married filing jointly or
qualifying widower with dependent child, and
(3) Nine Thousand Three Hundred Fifty Dollars
($9,350.00) for head of househ old.
h. For tax year 2024 and subsequent tax years, in the
case of individuals who use the standard deduction in
determining taxable income, there shall be ad ded or
deducted, as the case may be, the difference necessary
to allow a standard deducti on in lieu of the standard
deduction allowed by the In ternal Revenue Code, as
follows:
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(1) Thirteen Thousand Five Hundred Fifty Dollars
($13,550.00) for single or married filing
separately,
(2) Twenty-four Thousand Nine Hundred Dollars
($24,900.00) for married filing jointly or
qualifying widower with depende nt child, and
(3) Nineteen Thousand Two Hundred Twenty -five Dollars
($19,225.00) for head of household.
3. a. In the case of reside nt and part-year resident
individuals having adjusted gross income from sources
both within and without the state, the itemiz ed or
standard deductions and perso nal exemptions shall be
reduced to an amount which is the same portion of the
total thereof as Oklahoma ad justed gross income is of
adjusted gross income. To the extent itemized
deductions include allowable moving expens e, proration
of moving expense shall not be required or permitted
but allowable moving expense shall be fully deductible
for those taxpayers moving within or into Oklahoma
this state and no part of moving expense shall be
deductible for those taxpayers mov ing without or out
of Oklahoma this state. All other itemized or
standard deductions and persona l exemptions shall be
subject to proration as provided by law.
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b. For taxable years beginning on or after January 1,
2018, the net amount of itemized deduction s allowable
on an Oklahoma income tax return, subject to the
provisions of paragraph 24 of this subsecti on, shall
not exceed Seventeen Thous and Dollars ($17,000.00).
For purposes of this subparagraph, charitable
contributions and medical expenses deductib le for
federal income tax pu rposes shall be excluded from the
amount of Seventeen Th ousand Dollars ($17,000.00) as
specified by this subparagraph.
4. A resident individual with a physical disability
constituting a substantial handicap to employment may de duct from
Oklahoma adjusted gross income such expenditures to modify a motor
vehicle, home or workplace as are necessary to compensate for h is or
her handicap. A veteran certified by the Department of Veterans
Affairs of the federal government as having a service-connected
disability shall be conclusively presum ed to be an individual wit h a
physical disability constituting a substantial handicap to
employment. The Tax Commission shall promulgate rules containing a
list of combinations of common disabiliti es and modifications which
may be presumed to qualify for this deduction. The Tax Commission
shall prescribe necessary requirements for ver ification.
5. a. Before July 1, 2010, the first One Thousand Five
Hundred Dollars ($1,500.00) received by any person
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from the United States as s alary or compensation in
any form, other than retirement benefits, as a member
of any component of the Armed Forces of the United
States shall be deducted from taxable income.
b. On or after July 1, 2010, one hundred percent (10 0%)
of the income received by any person from the United
States as salary or co mpensation in any form, o ther
than retirement benefits, as a member of any component
of the Armed Forces of the United States shall be
deducted from taxable income.
c. Whenever the filing of a timely incom e tax return by a
member of the Armed Forces of the Unit ed States is
made impracticable or impossible of accomplishment by
reason of:
(1) absence from the United States, which term
includes only the states and the District of
Columbia;
(2) absence from the State of Oklahoma this state
while on active duty; or
(3) confinement in a hospital within the United
States for treatment of wounds, injuries or
disease,
the time for filing a return and paying an income tax
shall be and is hereby extended without incurring
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liability for interest or penalties, to the fifteenth
day of the third month following the month in which:
(a) Such individual shall return to the United
States if the extension is grant ed pursuant
to subparagraph a of this paragraph, return
to the State of Oklahoma this state if the
extension is granted pursuant to
subparagraph b of this paragraph or be
discharged from such hospital if the
extension is granted pursuant to
subparagraph c of this paragraph; or
(b) An executor, administrator, or conservator
of the estate of the taxpay er is appointed,
whichever event occurs the earl iest.
Provided, that the Tax Commission may, in its discretion, gr ant
any member of the Armed Forces of the Unit ed States an extension of
time for filing of income tax returns and payment of income tax
without incurring liabiliti es for interest or penalt ies. Such
extension may be granted only when in the judgm ent of the Tax
Commission a good cause exists therefor and may be for a period in
excess of six (6) months. A record of every suc h extension granted,
and the reason therefor, shall be kept.
6. Before July 1, 2010, the salary or any other form of
compensation, received from the United States by a member of any
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component of the Armed Forces of the United States, shall be
deducted from taxable income d uring the time in which t he person is
detained by the enemy in a conflict, is a prisoner of war or is
missing in action and not deceased; provided, after July 1, 2010,
all such salary or compensation sh all be subject to the deduction as
provided pursuant to pa ragraph 5 of this subsection.
7. a. An individual taxpayer, whether resident or
nonresident, may deduct an amount equal to the federal
income taxes paid by the taxpayer during the taxable
year.
b. Federal taxes as described in subparagraph a of this
paragraph shall be deductib le by any individual
taxpayer, whether resident or nonresident, only to the
extent they relate to income subject to taxation
pursuant to the provisions of the Oklahoma Income Ta x
Act. The maximum amount allowable in the preceding
paragraph shall be prorated on the ratio of the
Oklahoma adjusted gross income to federal adjusted
gross income.
c. For the purpose of this paragraph, “federal income
taxes paid” shall mean federal inco me taxes, surtaxes
imposed on incomes or excess profit s taxes, as though
the taxpayer was on the accrual basis. In determining
the amount of deduction for federa l income taxes for
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tax year 2001, the amount of the deduction shall not
be adjusted by the amo unt of any accelerated ten
percent (10%) tax rate bracket credit or advanced
refund of the credit received during the tax year
provided pursuant to the federal Economi c Growth and
Tax Relief Reconciliation Act of 2001, P.L. No. 107-
16, and the advanced ref und of such credit shall n ot
be subject to taxation.
d. The provisions of this paragraph shall apply to all
taxable years ending after December 31, 1978, and
beginning before January 1, 2006.
8. Retirement benefits not to exceed Five Thousand Five Hundred
Dollars ($5,500.00) for the 2004 ta x year, Seven Thousand Five
Hundred Dollars ($7,500.00) for the 2005 t ax year and Ten Thousand
Dollars ($10,000.00) for the 2006 tax yea r and all subsequent tax
years, which are rece ived by an individual from the civil s ervice of
the United States, the Oklahoma Public Emplo yees Retirement System,
the Teachers’ Retirement System of Oklahoma, the Oklahoma Law
Enforcement Retirement System, the Oklahoma Firefigh ters Pension and
Retirement System, the Oklahoma Police Pension and Retirement
System, the employee retirement systems cre ated by counties pursuant
to Section 951 et seq. of Title 19 of the Oklahoma Statutes, the
Uniform Retirement Syst em for Justices and Judges, the Oklahoma
Wildlife Conservation Department Retirement Fund, the Oklahoma
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Employment Security Commission Ret irement Plan, or the empl oyee
retirement systems created by municipalities pursuant to Section 48 -
101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt
from taxable income.
9. In taxable years beginning after December 3l, 1984 , Social
Security benefits received by an individual shall be exempt f rom
taxable income, to the extent such benefits are included in th e
federal adjusted gross income pursuant to th e provisions of Section
86 of the Internal Revenue Code, 26 U.S. C., Section 86.
10. For taxable years beginning afte r December 31, 1994, lump-
sum distributions from employer plans of deferred compens ation,
which are not qualified plans within the meaning of Section 401(a)
of the Internal Reve nue Code, 26 U.S.C., Section 401(a), and which
are deposited in and accounted for within a separate bank a ccount or
brokerage account in a financial institution within this state,
shall be excluded from taxable income in the same manner as a
qualifying rollover contribution to an i ndividual retirement account
within the meaning of Se ction 408 of the Internal Revenue Code, 26
U.S.C., Section 408. Amounts withdrawn from such bank or brokerage
account, including any earnings thereon, shall be included in
taxable income when withdrawn in the sam e manner as withdrawal s from
individual retirement accounts within the meaning of Section 408 of
the Internal Revenue Code.
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11. In taxable years beginning after December 31, 1995,
contributions made to and interest rece ived from a medical saving s
account established pursua nt to Sections 2621 throu gh 2623 of Title
63 of the Oklahoma Statutes shall be exempt from taxable income.
12. For taxable years beginning after December 31, 1996, the
Oklahoma adjusted gross income of any individual taxpayer who is a
swine or poultry produce r may be further adjusted for the deduction
for depreciation allowed for new construction or expansion costs
which may be computed using the same depreciation m ethod elected for
federal income tax p urposes except that the us eful life shall be
seven (7) years for purposes of th is paragraph. If depreciation is
allowed as a deduction in determining the adjust ed gross income of
an individual, any depreciation calculated and claimed pursuant to
this section shall in no event be a duplicati on of any depreciation
allowed or permitted on the federal income tax return of the
individual.
13. a. In taxable years beginning after December 31, 2002,
nonrecurring adoption expen ses paid by a resident
individual taxpayer in connection with:
(1) the adoption of a minor, or
(2) a proposed adoption of a minor which did not
result in a decreed adoption,
may be deducted from the O klahoma adjusted gross
income.
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b. The deductions for adoptions and proposed adoptions
authorized by this paragraph shall not excee d Twenty
Thousand Dollars ($20,000.00) per calendar year.
c. The Tax Commission shall promulgate rules to implement
the provisions of th is paragraph which shall contain a
specific list of nonrecurring adoption expenses w hich
may be presumed to qu alify for the deduction. Th e Tax
Commission shall prescribe necessary requirements for
verification.
d. “Nonrecurring adoption expenses ” means adoption fees,
court costs, medical expenses, attorney fees and
expenses which are dir ectly related to the legal
process of adoption of a child including, but not
limited to, costs relating to the adoption study,
health and psychological examinations, transp ortation
and reasonable costs of lodging and f ood for the child
or adoptive parents which are incurred to comp lete the
adoption process and are not reimbursed by o ther
sources. The term “nonrecurring adoption expenses ”
nonrecurring adoption expenses shall not include
attorney fees incurred for the purpose of litigating a
contested adoption, from and after the point of the
initiation of the contest, costs associated with
physical remodeling, renovation and alteration of th e
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adoptive parents’ home or property, except for a
special needs child as authorized by the court.
14. a. In taxable years beginning before Janua ry 1, 2005,
retirement benefits not to exceed the amo unts
specified in this paragraph, which are received by an
individual sixty-five (65) years of age or older and
whose Oklahoma adjusted gross income is Twenty -five
Thousand Dollars ($25,000.00) or less if the fili ng
status is single, head of household, or married filing
separate, or Fifty Thousand Dollars ($50,00 0.00) or
less if the filing status is married filing joint or
qualifying widow, shall be exempt from taxable income.
In taxable years beginning after December 31, 2004,
retirement benefits not to e xceed the amounts
specified in this paragraph, which are received by an
individual whose Oklahoma adjusted gross i ncome is
less than the qualifying amount speci fied in this
paragraph, shall be exempt from taxable income.
b. For purposes of this paragraph, the qualifying amount
shall be as follows:
(1) in taxable years beginning after December 31,
2004, and prior to January 1, 2 007, the
qualifying amount shall be Thirty -seven Thousand
Five Hundred Dollars ($37,500.00) or less if the
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filing status is single, head of household, or
married filing separate, or Seventy -five Thousand
Dollars ($75,000.00) or less if the filing status
is married filing jointly or qualifying widow,
(2) in the taxable year beginning January 1, 2007,
the qualifying amount shall be Fifty Thousand
Dollars ($50,000.00) or less if the filing statu s
is single, head of household, or married filing
separate, or One Hundred Thousand Dollars
($100,000.00) or less if th e filing status is
married filing jointly or qualifying widow,
(3) in the taxable year beginning January 1, 2008,
the qualifying amount shall be Sixty -two Thousand
Five Hundred Dollars ($62,500 .00) or less if the
filing status is single, head of household, or
married filing separate, or One Hundred Twenty-
five Thousand Dollars ($125,000.00) or less if
the filing status is married filing joi ntly or
qualifying widow,
(4) in the taxable year beginning Januar y 1, 2009,
the qualifying amount shall be One Hundred
Thousand Dollars ($100,00 0.00) or less if the
filing status is single, head of household, or
married filing separate, or Two Hundred Thousand
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Dollars ($200,000.00) or less if the filing
status is married filing jointly or qualifying
widow, and
(5) in the taxable year beginning January 1, 20 10,
and subsequent taxable years, there shall be no
limitation upon the qualifying amount.
c. For purposes of this paragraph, “retirement benefits”
means the total distributions or withdrawals from the
following:
(1) an employee pension benefit p lan which satisfies
the requirements of Section 401 o f the Internal
Revenue Code, 26 U.S.C., Section 401,
(2) an eligible deferred compensati on plan that
satisfies the requirements of Section 457 of the
Internal Revenue Code, 26 U .S.C., Section 457,
(3) an individual retirement account, annuity or
trust or simplified employee pension that
satisfies the requirements of Section 408 of the
Internal Revenue Code, 26 U.S.C., Section 4 08,
(4) an employee annuity subject to the provisions of
Section 403(a) or (b) of the Internal Revenue
Code, 26 U.S.C., Section 403( a) or (b),
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(5) United States Retirement Bonds which satisfy the
requirements of Section 86 of the Internal
Revenue Code, 26 U.S.C., Section 86, or
(6) lump-sum distributions fro m a retirement plan
which satisfies the requirements of Section
402(e) of the Internal Revenue Code, 26 U.S.C.,
Section 402(e).
d. The amount of the exemption provided by this paragra ph
shall be limited to Five Thousand Five Hundred Dollars
($5,500.00) for the 2004 tax year, Seven Thousand Five
Hundred Dollars ($7,500.00) for the 200 5 tax year and
Ten Thousand Dollars ($10,000.00) for the tax year
2006 and for all subse quent tax years. Any indi vidual
who claims the exemption provided for in paragraph 8
of this subsection shall not be permitt ed to claim a
combined total exemption pursuant to this paragraph
and paragraph 8 of this su bsection in an amount
exceeding Five Thousand Five Hund red Dollars
($5,500.00) for the 2004 tax year, Seven Thousand Five
Hundred Dollars ($7,500.00) for the 2005 tax year and
Ten Thousand Dollars ($10,000.0 0) for the 2006 tax
year and all subsequent tax years.
15. In taxable years beginning a fter December 31, 1999, fo r an
individual engaged in production agriculture who has filed a
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Schedule F form with the taxpayer ’s federal income tax return for
such taxable year, there shall be excluded from taxable income any
amount which was included as federal taxable income or federal
adjusted gross income and which consists of the discharge of an
obligation by a creditor of the taxpayer incurred to finance the
production of agricultural products.
16. In taxable years beginning December 31, 2000, an amou nt
equal to one hundred pe rcent (100%) of the amount of any scholarship
or stipend received from participation in the Oklahom a Police Corps
Program, as established in Section 2 -140.3 of Title 47 of the
Oklahoma Statutes shall be exempt from taxable income.
17. a. In taxable years beginning a fter December 31, 2001,
and before January 1, 2005, t here shall be allowed a
deduction in the amount of contributions to accounts
established pursuant to the Oklahoma College Savings
Plan Act. The deduction shall equal the amount of
contributions to accounts, but in no event shall the
deduction for each con tributor exceed Two Thousand
Five Hundred Dollars ($2,500.00) each taxable year for
each account.
b. In taxable years beginning after Dec ember 31, 2004,
each taxpayer shall be allowed a deduction for
contributions to accounts established pursuant to the
Oklahoma College Savings Pla n Act. The maximum annual
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deduction shall equal the amount of contributions to
all such accounts plus any contributions to such
accounts by the taxpayer for prior tax able years after
December 31, 2004, which were not deducted, bu t in no
event shall the deduction fo r each tax year exceed Ten
Thousand Dollars ($10,000.00) for e ach individual
taxpayer or Twenty Thous and Dollars ($20,000.00) for
taxpayers filing a joint return. Any amount of a
contribution that is not deducted by the taxpayer in
the year for which the contribution is made may be
carried forward as a deduction from income for the
succeeding five (5) years. For taxable years
beginning after December 31, 200 5, deductions may be
taken for contributions and rollovers made during a
taxable year and up to Apr il 15 of the succeeding
year, or the due date of a taxpayer ’s state income tax
return, excluding exte nsions, whichever is later.
Provided, a deduction for the same co ntribution may
not be taken for two (2) different tax able years.
c. In taxable years beginning after December 31, 2006,
deductions for contributions made pursuant to
subparagraph b of this paragraph shall be limited as
follows:
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(1) for a taxpayer who qualified for the five -year
carryforward election and who takes a rollover or
nonqualified withdrawal during that period, the
tax deduction otherwise avai lable pursuant to
subparagraph b of this paragraph shall be reduced
by the amount which is equal to the rol lover or
nonqualified withdrawal, and
(2) for a taxpayer who elects to take a r ollover or
nonqualified withdrawal within the same ta x year
in which a contribution was made to the
taxpayer’s account, the tax deduction oth erwise
available pursuant to subparagraph b of this
paragraph shall be reduced by the amo unt of the
contribution which is equ al to the rollover or
nonqualified withdrawal.
d. If a taxpayer elects to take a rollover on a
contribution for which a deduction has been taken
pursuant to subparagra ph b of this paragraph within
one (1) year of the dat e of contribution, the amo unt
of such rollover shall be included in the adjuste d
gross income of the taxpayer in the taxable year of
the rollover.
e. If a taxpayer makes a nonqualified withdraw al of
contributions for which a deduction was taken pursuant
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to subparagraph b of this paragraph, s uch nonqualified
withdrawal and any earnings thereon shall be included
in the adjusted gross income o f the taxpayer in the
taxable year of the nonqualified withdrawal.
f. As used in this paragraph:
(1) “non-qualified withdrawal” means a withdrawal
from an Oklahoma College Savings Plan account
other than one of the following:
(a) a qualified withdrawal,
(b) a withdrawal made as a resul t of the death
or disability of the designated beneficiary
of an account,
(c) a withdrawal that is made on the account of
a scholarship or the allowance or payment
described in Section 135(d)(1)(B) or (C) or
by the Internal Revenue Code, received by
the designated beneficiary to the extent t he
amount of the refund does not exceed the
amount of the scholarship, allowance, or
payment, or
(d) a rollover or change of designa ted
beneficiary as permitted by subsection F of
Section 3970.7 of Title 70 of the Oklahoma
Statutes, and
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(2) “rollover” means the transfer of funds from the
Oklahoma College Sav ings Plan to any other plan
under Section 529 of the Internal Revenue Code.
18. For tax years 2006 through 2021, retirement benefits
received by an individual from any component of the Armed Forces of
the United States in an amount not to exceed the great er of seventy-
five percent (75%) of such benefits or Ten Thousand Dollars
($10,000.00) shall be exempt from taxable income but in no case less
than the amount of the exemption provided by paragraph 14 of this
subsection. For tax year 2022 and subsequent t ax years, retirement
benefits received by an individual from any component o f the Armed
Forces of the United States shall be exempt from taxa ble income.
19. For taxable years beginning after December 31, 20 06,
retirement benefits received by federal civil service retirees,
including survivor annuities, paid in lieu of Social Securit y
benefits shall be exempt from taxable income to the extent such
benefits are included in the federal adjusted gross income pursuant
to the provisions of Section 86 of the Inte rnal Revenue Code, 26
U.S.C., Section 86, according to the following schedule:
a. in the taxable year beginning January 1, 2007, twenty
percent (20%) of such benefits shall be exempt,
b. in the taxable year beginning January 1, 2008, forty
percent (40%) of such benefits shall be ex empt,
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c. in the taxable year beginning January 1, 200 9, sixty
percent (60%) of such benefits shall be exempt,
d. in the taxable year b eginning January 1, 2010, eighty
percent (80%) of such benefits shall be exempt, and
e. in the taxable year beginning January 1, 201 1, and
subsequent taxable years, one hundred percent (100%)
of such benefits shall be exempt.
20. a. For taxable years beginning after December 31, 2007, a
resident individual may deduct up to Ten Thousand
Dollars ($10,000.00) from Oklahoma adjus ted gross
income if the individual, or the dependent of the
individual, while living, donates one or more human
organs of the individu al to another human being for
human organ transplantation. As used in this
paragraph, “human organ” means all or part of a liver,
pancreas, kidney, intestine, lung, or bone marrow. A
deduction that is claimed under this para graph may be
claimed in the taxable year in which the human organ
transplantation occurs.
b. An individual may claim this dedu ction only once, and
the deduction may be claimed only for unreimbursed
expenses that are incurred by the individual and
related to the organ donation of the in dividual.
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c. The Oklahoma Tax Commiss ion shall promulgate rules to
implement the provisions of t his paragraph which shall
contain a specific list of expenses which may be
presumed to qualify for the deduction. The Tax
Commission shall prescribe necessary requirements for
verification.
21. For taxable years beginning after December 31, 2009, there
shall be exempt from taxabl e income any amount received by the
beneficiary of the death benefit for an emergency medical technician
or a registered emergency med ical responder provided by Section 1 -
2505.1 of Title 63 of the Oklahoma Statutes.
22. For taxable years beginning after December 31 , 2008,
taxable income shall be increased by any unemployment compensation
exempted under Section 85(c) of the Internal Revenue Code, 26
U.S.C., Section 85(c)(2009).
23. For taxable years beginning after December 31, 20 08, there
shall be exempt from taxable income any payment in an amount less
than Six Hundred Dollars ($600.00) received by a person as an award
for participation in a competitive livestock show eve nt. For
purposes of this paragraph, the payment shall be t reated as a
scholarship amount paid by the entity sponsoring the event and the
sponsoring entity shall cause the payment to be categorized as a
scholarship in its books and records.
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24. For taxable years be ginning on or after January 1, 2016,
taxable income shall be increased by a ny amount of state and local
sales or income taxes de ducted under 26 U.S.C., Section 164 of the
Internal Revenue Code. If the amount of state and local taxes
deducted on the federal return is limited, taxable income on the
state return shall be increased only by th e amount actually deducted
after any such limitations are applied.
25. For taxable years beginning after December 31, 2020, each
taxpayer shall be allowed a deduction for contributions to accounts
established pursuant t o the Achieving a Better L ife Experience
(ABLE) Program as established in Secti on 4001.1 et seq. of Title 56
of the Oklahoma Statutes. For any tax year, the de duction provided
for in this paragrap h shall not exceed Ten Thousand Dollars
($10,000.00) for an individual taxpayer or Twenty Thous and Dollars
($20,000.00) for taxpayers filing a joint return. Any amount of
contribution not deducted by the taxpayer in the tax year for which
the contribution is made m ay be carried forward as a deduction from
income for up to five (5) tax yea rs. Deductions may be taken for
contributions made d uring the tax year and through April 15 of the
succeeding tax year, or through th e due date of a taxpayer’s state
income tax return excluding extensions, whichever is later.
Provided, a deduction for the same con tribution may not be taken in
more than one (1) tax year.
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F. 1. For taxable years beginning after Decem ber 31, 2004, a
deduction from the Oklahoma adjusted gross income of any individual
taxpayer shall be allowed for q ualifying gains receiving capital
treatment that are included in the federal ad justed gross income of
such individual taxpayer during the taxable year.
2. As used in this subsection:
a. “qualifying gains receiving capital treatment ” means
the amount of net capital gains, as defined in Secti on
1222(11) of the Internal Revenue Code, included in an
individual taxpayer’s federal income tax return that
result from:
(1) the sale of real property or tangible person al
property located within Oklahoma this state that
has been directly or in directly owned by the
individual taxpayer for a holdi ng period of at
least five (5) years prior to the date of the
transaction from which suc h net capital gains
arise,
(2) the sale of stock or the sale of a direct or
indirect ownership interest in an Oklahoma
company, limited liability company, or
partnership where such stock or ownership
interest has been directly or indirectly owned by
the individual taxpayer for a holding period of
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at least two (2) years prior to the date of t he
transaction from which th e net capital gains
arise, or
(3) the sale of real property, tangible personal
property or intangible personal property located
within Oklahoma this state as part of the sale of
all or substantially all of the assets of an
Oklahoma company, limited liability company , or
partnership or an Oklahoma proprietorship
business enterprise where such property has been
directly or indirectly owned by such entity or
business enterprise or owned by the own ers of
such entity or business enterpr ise for a period
of at least two (2) years prior to the date of
the transaction from which the net capital gains
arise,
b. “holding period” means an uninterrupted peri od of
time. The holding period shall include any ad ditional
period when the property was held by another
individual or entity, if such additional period is
included in the taxpayer ’s holding period for the
asset pursuant to the Internal Revenue Code,
c. “Oklahoma company,” “limited liability company, ” or
“partnership” means an entity whose pr imary
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headquarters have be en located in Oklahoma this state
for at least three (3) uninterrupted years prior to
the date of the transaction from which the net capital
gains arise,
d. “direct” means the individual taxpayer directly owns
the asset,
e. “indirect” means the individual taxpayer o wns an
interest in a pass-through entity (or chain of pass -
through entities) that sells the asset that gives rise
to the qualifying gains receiving capital treatment.
(1) With respect to sales of real pro perty or
tangible personal property locate d within
Oklahoma this state, the deduction described in
this subsection shall not apply unless the pass -
through entity that makes the sale h as held the
property for not less than five (5) uninterrupted
years prior to the date of the transaction that
created the capital gain, and each pass -through
entity included in the chain of ownership has
been a member, partner, or shareholder of the
pass-through entity in the tier immediately below
it for an uninterrupted period of not le ss than
five (5) years.
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(2) With respect to sales of stock or ownership
interest in or sales of all or substantially all
of the assets of an Oklahoma company, limited
liability company, partnership or Oklahoma
proprietorship business enterprise, the deduction
described in this subsection shall no t apply
unless the pass-through entity that makes the
sale has held the stock or ownership interest for
not less than two (2) uninterrupted years pri or
to the date of the transaction that created the
capital gain, and each pass-through entity
included in the chain of owners hip has been a
member, partner or shareholder of the pass -
through entity in the tier immediately below it
for an uninterrupted period of not less than two
(2) years. For purposes of this division,
uninterrupted ownership prior to July 1, 2007,
shall be included in the determination of the
required holding period prescribed by this
division, and
f. “Oklahoma proprietorship business en terprise” means a
business enterprise whose income and expenses ha ve
been reported on Schedule C or F of an individual
taxpayer’s federal income tax r eturn, or any similar
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successor schedule published by the Internal Revenue
Service and whose primary headquarters have been
located in Oklahoma this state for at least three (3)
uninterrupted years prior to the da te of the
transaction from which the net capital gains arise.
G. 1. For purposes of computing its Oklahoma taxable income
under this section, the dividends -paid deduction otherwise allowed
by federal law in computing n et income of a real estate investment
trust that is subject to federal income t ax shall be added back in
computing the tax imposed by this state under this title if th e real
estate investment trust is a captive real estate investment trust.
2. For purposes of computing its Oklahoma taxable income under
this section, a taxpayer shall add back otherwise deductible rents
and interest expenses paid to a captive real estate investment trust
that is not subject to the provis ions of paragraph 1 of this
subsection. As used in this subsect ion:
a. the term “real estate investment trust ” or “REIT”
means the meaning ascribed to such term in Section 856
of the Internal Revenue Code ,
b. the term “captive real estate investment trust ” means
a real estate investment trust, the shares or
beneficial interests of which are not regularly traded
on an established securities market and more than
fifty percent (50%) of the voting power or value of
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the beneficial interest s or shares of which a re owned
or controlled, directly or in directly, or
constructively, by a single entity that is:
(1) treated as an association taxable as a
corporation under the Internal Revenue Code, and
(2) not exempt from federal income tax pursuant to
the provisions of Section 501(a) of the Internal
Revenue Code.
The term shall not include a real estate investment
trust that is intended to be regularly traded on an
established securities market, and that satisfies the
requirements of Section 856(a)( 5) and (6) of the U.S.
Internal Revenue Code by reason of Se ction 856(h)(2)
of the Internal Revenue Code,
c. the term “association taxable as a corporation” shall
not include the following entities:
(1) any real estate investme nt trust as defined in
paragraph a of this subsection other than a
“captive real estate investment trust” captive
real estate investment trust, or
(2) any qualified real estate investment trust
subsidiary under Section 856(i) of the Internal
Revenue Code, other than a qualified REIT
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subsidiary of a “captive real estate investment
trust” captive real estate investment trust, or
(3) any Listed Australian Property Trust listed
Australian property trust (meaning an Australian
unit trust registered as a “Managed Investment
Scheme” “managed investment scheme ” under the
Australian Corporations Act 2001 in which the
principal class of un its is listed on a
recognized stock exchange in Australia and is
regularly traded on an established securities
market), or an entity organized as a trust,
provided that a Listed Australian Property Trust
listed Australian property trust owns or
controls, directly or indirectly, seventy -five
percent (75%) or more of the voting power or
value of the beneficial interests or shares of
such trust, or
(4) any Qualified Foreign Entity qualified foreign
entity, meaning a corporat ion, trust, association
or partnership organized outside the laws of the
United States and which satisfies the following
criteria:
(a) at least seventy-five percent (75%) of the
entity’s total asset value at the close of
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its taxable year is represented by real
estate assets, as defined in Section
856(c)(5)(B) of the Internal Revenue Code,
thereby including shares or certificates of
beneficial interest in any real estate
investment trust, cash and cash equi valents,
and U.S. Government sec urities,
(b) the entity receives a dividend -paid
deduction comparable to Section 561 of the
Internal Revenue Code, or is exempt from
entity level tax,
(c) the entity is required to distribute at
least eighty-five percent (85%) of its
taxable income, as computed in the
jurisdiction in which it is organized, to
the holders of its shares or certificates of
beneficial interest on an annual basis,
(d) not more than ten percent (10%) of the
voting power or value in such entity is h eld
directly or indirectly or co nstructively by
a single entity or individual, or the sh ares
or beneficial interests of such entity are
regularly traded on an established
securities market, and
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(e) the entity is organized in a country wh ich
has a tax treaty with the Uni ted States.
3. For purposes of this s ubsection, the constructive ownership
rules of Section 318(a) of the Internal R evenue Code, as modified by
Section 856(d)(5) of the Intern al Revenue Code, shall apply in
determining the ownership of stock , assets, or net profits of any
person.
4. A real estate investment trust that does not become
regularly traded on an established securities market within one (1)
year of the date on which it first becomes a real estate investment
trust shall be deemed not to have been regularly traded on an
established securities market, retroactive to the date it first
became a real estate investme nt trust, and shall file an amended
return reflecting such retroactive designation for any tax year or
part year occurring du ring its initial year of status as a real
estate investment trust. For purposes of this subsection, a real
estate investment trust becomes a real estate investment trust on
the first day it has both met the requirements of Section 856 o f the
Internal Revenue Code and h as elected to be treated as a real est ate
investment trust pursuant to Section 856(c)(1) of the Internal
Revenue Code.
SECTION 3. This act shall become effective July 1, 2024.
SECTION 4. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is he reby
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declared to exist, by reason whereof thi s act shall take effect and
be in full force from and after its passage and approval.
59-2-2902 QD 12/12/2023 5:50:00 PM