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STATE OF OKLAHOMA
1st Session of the 60th Legislature (2025)
HOUSE BILL 1602 By: Gise
AS INTRODUCED
An Act relating to revenue and taxation; amending 68
O.S. 2021, Section 2357.404, which relates to income
tax credits for tuition reimburse ment for qualified
employees of vehicle and automotive parts
manufacturing companies; modifying dates to which
credits may be claimed; providing an effective date .
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 2357.404, is
amended to read as fol lows:
Section 2357.404. Tax credit for tuition reimbursement for
qualified employees of vehicle and automotive parts manufacturing
companies.
A. As used in this section:
1. "Vehicle manufacturing " and "automotive parts manufacturing "
mean a private or public company first placed in operation in this
state after November 1, 2019, which is engaged in the research,
development, design and manufacture of motor vehicles or automotiv e
parts manufacturing which may be driven on the avenues of public
access. For purposes of this section, "motor vehicle" does not
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include low-speed electric vehicles or motor vehicles manufactured
primarily for off-road use, such as primarily for use on a golf
course;
2. "Compensation" means payments in the form of contract labor
for which the payor is required to provide a Form 1099 to the person
paid, wages subject to withholding tax paid to a part -time employee
or full-time employee, or salary or other remuneration.
Compensation shall not include employer -provided retirement, m edical
or health-care benefits, reimbursement for travel, meals, lodging or
any other expense;
3. "Institution" means an institution within The Oklahoma State
System of Higher Education or any other public or private college or
university that is accredited by a national accrediting body;
4. "Qualified employer" means a sole proprietor, general
partnership, limited partnership, limited liability company,
corporation, other legal ly recognized business entity, or public
entity whose principal business activ ity involves the vehicle
manufacturing as defined in this section;
5. "Qualified employee" means any person, regardless of the
date of hire, employed in this state by or contrac ting in this state
with a qualified employer on or after January 1, 2018, who has been
awarded an undergraduate or graduate degree from a qualified program
by an institution, and who was not employed in vehicle manufacturing
in this state immediately prece ding employment or contracting with a
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qualified employer. Provided, the defin ition shall not be
interpreted to exclude any person who was employed in vehicle
manufacturing, but not as a full -time engineer, prior to being
awarded an undergraduate or gradua te degree from a qualified program
by an institution or any person who has been awarded an
undergraduate or graduate degree from a qualified program by an
institution and is employed by a professional staffing company and
assigned to work in vehicle manufa cturing in this state;
6. "Qualified program" means a program that awards an
undergraduate or graduate degree and that has been accredited by the
Engineering Accreditation Commission of the Accreditation Board for
Engineering and Technology (ABET); and
7. "Tuition" means the average annual amount paid by a
qualified employee for enrollment and instruction in a qualified
program. Tuition shall not include the cost of books, fees or room
and board.
B. 1. Except as otherwise provided in subsection E of th is
section, for taxable years beginning after December 31, 2018, and
ending before January 1, 2026 2032, a qualified employer shall be
allowed a credit against the tax imposed pursuant to Section 2355 of
Title 68 of the Oklahoma Statutes for tuition reimbu rsed to a
qualified employee.
2. The credit authorized by this subsection may be claimed only
if the qualified employee has been awarded an undergraduate or
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graduate degree within one (1) year of commencing employment with
the qualified employer.
3. The credit authorized by this subsection shall be in the
amount of fifty percent ( 50%) of the tuition reimbursed to a
qualified employee for the first through fourth years of employment.
In no event shall this credit exceed fifty percent (50%) of the
average annual amount paid by a qualified employee for enrollment
and instruction in a qualified program at a public institution in
Oklahoma.
4. The credit authorized by this subsection shall not be used
to reduce the tax liability of the qualified employer to le ss than
zero (0).
5. No credit authorized by this subsection shall be claimed
after the fourth year of employment.
C. 1. Except as otherwise provided in subsection E of this
section, for taxable years beginning after December 31, 2018, and
ending before January 1, 2026 2032, a qualified employer shall be
allowed a credit against the tax imposed pursuant to Section 2355 of
Title 68 of the Oklahoma Statutes for compensation paid to a
qualified employee.
2. The credit authorized by this subsection shall be in the
amount of:
a. ten percent (10%) of the compensation paid for the
first through fifth years of employment in vehicle
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manufacturing if the qualified employee graduated from
an institution located in this state, or
b. five percent (5%) of the compensa tion paid for the
first through fifth years of employment in vehicle
manufacturing if the qualified employee graduated from
an institution located outside this state.
3. The credit authorized by this subsection shall not exceed
Twelve Thousand Five Hundre d Dollars ($12,500.00) for each qualified
employee annually.
4. The credit authorized by this subsection shall not be used
to reduce the tax liability of the qualified employer to less than
zero (0).
5. No credit authorized pursuant to this subsection sh all be
claimed after the fifth year of employment.
D. 1. Except as otherwise provided in subsection F of this
section, for taxable years beginning after December 31, 2018, and
ending before January 1, 2026 2032, a qualified employee shall be
allowed a credit against the tax imposed pursuant to Section 2355 of
Title 68 of the Oklah oma Statutes of up to Five Thousand Dollars
($5,000.00) per year for a period of time not to exceed five (5)
years.
2. The credit authorized by this subsection shall not be used
to reduce the tax liability of the taxpayer to less than zero (0).
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3. Any credit claimed, but not used, may be carried over, in
order, to each of the five (5) subsequent taxable years.
E. 1. For any tax year during which the credit is allowed, the
total amount of credits authorized by subsections B and C of this
section used to offset tax shall be adjusted annually to limit the
annual amount of credits to Three Million Dollars ($3,000,000.00).
The Tax Commission shall annually calculate and publish a p ercentage
by which the credits authorized by subsections B and C of this
section shall be reduced so the total amount of credits used to
offset tax does not exceed Three Million Dollars ($3,000,000.00) per
year. The formula to be used for the percentage a djustment shall be
Three Million Dollars ($3,000,000.00) divided by the credit s claimed
in the second preceding year.
2. Pursuant to paragraph 1 of this subsection, in the event the
total tax credits authorized by subsections B and C of this section
exceed Three Million Dollars ($3,000,000.00) in any tax year, the
Tax Commission shall permit any excess over Three Million Dollars
($3,000,000.00), but shall factor such excess into the percentage
adjustment formula for subsequent years.
F. 1. For any tax ye ar during which the credit is allowed, the
total amount of credits authorized by subsection D of this section
used to offset tax shall be adjusted annually to limit the annual
amount of credits to Two Million Dollars ($2,000,000.00). The Tax
Commission shall annually calculate and publish a percentage by
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which the credits authorized by subsection D of this section shall
be reduced so the total amount of credits used to offset tax does
not exceed Two Million Dollars ($2,000,000.00) per year. The
formula to be used for the percentage adjustment shall be Two
Million Dollars ($2,000,00 0.00) divided by the credits claimed in
the second preceding year.
2. Pursuant to paragraph 1 of this subsection, in the event the
total tax credits authorized by subsection D o f this section exceed
Two Million Dollars ($2,000,000.00) in any tax year, the Tax
Commission shall permit any excess over Two Million Dollars
($2,000,000.00), but shall factor such excess into the percentage
adjustment formula for subsequent years.
SECTION 2. This act shall become effective November 1, 2025.
60-1-11209 AO 12/27/24