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Oklahoma House Bill HB1788

Oklahoma 2025 Regular Session

Oklahoma House Bill HB1788 Compare Versions

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2828 STATE OF OKLAHOMA
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3030 1st Session of the 60th Legislature (2025)
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3232 HOUSE BILL 1788 By: Lepak
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3838 AS INTRODUCED
3939
4040 An Act relating to revenue and taxation; amending 68
4141 O.S. 2021, Section 2355, as last amended by Section
4242 1, Chapter 27, 1st Extraordinary Session, O.S.L. 2023
4343 (68 O.S. Supp. 2024, Section 2355), which relates to
4444 individual income tax rates; modifying income tax
4545 rates; amending 68 O.S. 2021, Section 2358, as last
4646 amended by Section 155, Chapter 452, O.S.L. 2024 (68
4747 O.S. Supp. 2024, Section 2358), which relates to
4848 Oklahoma taxable income and Oklahoma adjusted gross
4949 income; modifying standard deduction amounts; and
5050 providing an effective date .
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5656 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
5757 SECTION 1. AMENDATORY 68 O.S. 2021, Section 2355, as
5858 last amended by Section 1, Chapter 27, 1st Extraordinary Session,
5959 O.S.L. 2023 (68 O.S. Supp. 2024, Section 2355), is amended to read
6060 as follows:
6161 Section 2355. A. Individuals. For all taxable years beginning
6262 after December 31, 1998, and before January 1, 2006, a tax is hereby
6363 imposed upon the Oklahoma taxable income of every resident or
6464 nonresident individual, which tax shall be computed at the option of
6565 the taxpayer under one of the two following methods:
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9292 1. METHOD 1.
9393 a. Single individuals and married individuals filing
9494 separately not deducting federal income tax:
9595 (1) 1/2% tax on first $1,000.00 or part thereof,
9696 (2) 1% tax on next $1,500.00 or part thereof,
9797 (3) 2% tax on next $1,250.00 or part thereof,
9898 (4) 3% tax on next $1,150.00 or part thereof,
9999 (5) 4% tax on next $1,300.00 or part th ereof,
100100 (6) 5% tax on next $1,500.00 or part thereof,
101101 (7) 6% tax on next $2,300.00 or part thereof, and
102102 (8) (a) for taxable years beginning after December
103103 31, 1998, and before Jan uary 1, 2002, 6.75%
104104 tax on the remainder,
105105 (b) for taxable years beginning on or after
106106 January 1, 2002, and before January 1, 2004,
107107 7% tax on the remainder, and
108108 (c) for taxable years beginning on or after
109109 January 1, 2004, 6.65% tax on the remainder.
110110 b. Married individuals filing jointly and surviving
111111 spouse to the extent and in the m anner that a
112112 surviving spouse is permitted to file a joint return
113113 under the provisions of the Internal Revenue Code and
114114 heads of households as defined in the Internal Revenue
115115 Code not deducting federal income tax:
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142142 (1) 1/2% tax on first $2,000.00 or part thereof,
143143 (2) 1% tax on next $3,000.00 or part thereof,
144144 (3) 2% tax on next $2,500.00 or part thereof,
145145 (4) 3% tax on next $2,300.00 or part thereof,
146146 (5) 4% tax on next $2,400.00 or p art thereof,
147147 (6) 5% tax on next $2,800.00 or part thereof,
148148 (7) 6% tax on next $6,000.00 or part thereof, and
149149 (8) (a) for taxable years beginning after December
150150 31, 1998, and before January 1, 2002, 6.75%
151151 tax on the remainder,
152152 (b) for taxable years beginnin g on or after
153153 January 1, 2002, and before January 1, 2004,
154154 7% tax on the remainder, and
155155 (c) for taxable years beginning on or after
156156 January 1, 2004, 6.65% tax on the remainder.
157157 2. METHOD 2.
158158 a. Single individuals and married individuals filing
159159 separately deducting federal income tax:
160160 (1) 1/2% tax on first $1,000.00 or part thereof,
161161 (2) 1% tax on next $1,500.00 or part thereof,
162162 (3) 2% tax on next $1,250.00 or part thereof,
163163 (4) 3% tax on next $1,150.00 or part thereof,
164164 (5) 4% tax on next $1,200.00 or part the reof,
165165 (6) 5% tax on next $1,400.00 or part thereof,
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192192 (7) 6% tax on next $1,500.00 or part thereof,
193193 (8) 7% tax on next $1,500.00 or part thereof,
194194 (9) 8% tax on next $2,000.00 or part thereof,
195195 (10) 9% tax on next $3,500.00 or part thereof, and
196196 (11) 10% tax on the remainder.
197197 b. Married individuals filing jointly and surviving
198198 spouse to the extent and in the manner that a
199199 surviving spouse is permitted to file a joint return
200200 under the provisions of the Internal Revenue Code and
201201 heads of households as defined in t he Internal Revenue
202202 Code deducting federal income tax:
203203 (1) 1/2% tax on the first $2,000.00 or part thereof,
204204 (2) 1% tax on the next $3,000.00 or part thereof,
205205 (3) 2% tax on the next $2,500.00 or part thereof,
206206 (4) 3% tax on the next $1,400.00 or part thereof ,
207207 (5) 4% tax on the next $1,500.00 or part thereof,
208208 (6) 5% tax on the next $1, 600.00 or part thereof,
209209 (7) 6% tax on the next $1,250.00 or part thereof,
210210 (8) 7% tax on the next $1,750.00 or part thereof,
211211 (9) 8% tax on the next $3,000.00 or part thereof,
212212 (10) 9% tax on the next $6,000.00 or part thereof, and
213213 (11) 10% tax on the remainder.
214214 B. Individuals. For all taxable years beginning on or after
215215 January 1, 2008, and ending any tax year which begins after December
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242242 31, 2015, for which the determination requi red pursuant to Sections
243243 4 and 5 of this act is made by the State Board of Equ alization, a
244244 tax is hereby imposed upon the Oklahoma taxable income of every
245245 resident or nonresident individual, which tax shall be computed as
246246 follows:
247247 1. Single individuals an d married individuals filing
248248 separately:
249249 (a) 1/2% tax on first $1,000.00 or part thereof,
250250 (b) 1% tax on next $1,500.00 or part thereof,
251251 (c) 2% tax on next $1,250.00 or part thereof,
252252 (d) 3% tax on next $1,150.00 or part thereof,
253253 (e) 4% tax on next $2,300.00 or part thereof,
254254 (f) 5% tax on next $1,500.00 or part thereof,
255255 (g) 5.50% tax on the remainder for the 2008 tax year and
256256 any subsequent tax year unless the rate prescribed by
257257 subparagraph (h) of this paragraph is in effect, and
258258 (h) 5.25% tax on the remaind er for the 2009 and subsequent
259259 tax years. The decrease in the top marginal
260260 individual income tax rate otherwise authorized by
261261 this subparagraph shall be contingent upon the
262262 determination required to be made by the State Board
263263 of Equalization pursuant to S ection 2355.1A of this
264264 title.
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291291 2. Married individuals filing jointly and survi ving spouse to
292292 the extent and in the manner that a surviving spouse is permitted to
293293 file a joint return under the provisions of the Internal Revenue
294294 Code and heads of households as defined in the Internal Revenue
295295 Code:
296296 (a) 1/2% tax on first $2,000.00 or part thereof,
297297 (b) 1% tax on next $3,000.00 or part thereof,
298298 (c) 2% tax on next $2,500.00 or part thereof,
299299 (d) 3% tax on next $2,300.00 or part thereof,
300300 (e) 4% tax on next $2,400.00 or part thereof,
301301 (f) 5% tax on next $2,800.00 or part thereof,
302302 (g) 5.50% tax on the remainder for the 2008 tax year and
303303 any subsequent tax year unless the rate prescribed by
304304 subparagraph (h) of this paragraph is in effect, and
305305 (h) 5.25% tax on the remaind er for the 2009 and subsequent
306306 tax years. The decrease in the top marginal
307307 individual income tax rate otherwise authorized by
308308 this subparagraph shall be contingent upon the
309309 determination required to be made by the State Board
310310 of Equalization pursuant to S ection 2355.1A of this
311311 title.
312312 C. Individuals. For all taxable years beginnin g on or after
313313 January 1, 2024, and ending December 31, 2025, a tax is hereby
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340340 imposed upon the Oklahoma taxable income of every resident or
341341 nonresident individual, which tax shall be computed as follows:
342342 1. Single individuals and married individuals filing
343343 separately:
344344 (a) 0.25% tax on first $1,000.00 or part thereof,
345345 (b) 0.75% tax on next $1,500.00 or part thereof,
346346 (c) 1.75% tax on next $1,250.00 or part thereof,
347347 (d) 2.75% tax on next $1,150.00 or part thereof,
348348 (e) 3.75% tax on next $2,300.00 or part thereo f,
349349 (f) 4.75% tax on the remainder.
350350 2. Married individuals filing jointly and surviving spouse to
351351 the extent and in the manner that a surviving spouse is permitted to
352352 file a joint return under the provisions of the Internal Revenue
353353 Code and heads of households as defined in the Internal Revenue
354354 Code:
355355 (a) 0.25% tax on first $2,000.00 or part thereof,
356356 (b) 0.75% tax on next $3,000.00 or part thereof,
357357 (c) 1.75% tax on next $2,500.00 o r part thereof,
358358 (d) 2.75% tax on next $2,300.00 or part thereof,
359359 (e) 3.75% tax on next $4,600.00 or part thereof,
360360 (f) 4.75% tax on the remainder.
361361 No deduction for federal income taxes paid shall be allowed to
362362 any taxpayer to arrive at taxable income.
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389389 D. Individuals. For all taxable years beginning on or after
390390 January 1, 2026, a tax is hereby imposed upon the Oklahoma taxable
391391 income of every resident or nonresident individual, which tax shall
392392 be computed as follows:
393393 1. Single individuals and married indiv iduals filing separately
394394 at the rate of four and seventy -five hundredths perce nt (4.75%);
395395 2. Married individuals filing jointly and surviving spouse to
396396 the extent and in the manner that a surviving spouse is permitted to
397397 file a joint return under the prov isions of the Internal Revenue
398398 Code and heads of households as defined in the Internal Revenue Code
399399 at the rate of four and seventy -five hundredths percent (4.75%).
400400 No deduction for federal income taxes paid shall be allowed to
401401 any taxpayer to arrive at ta xable income.
402402 E. Nonresident aliens. In lieu of the rates set forth in
403403 subsection A above this section, there shall be imposed on
404404 nonresident aliens, as defined in the Internal Revenue Code, a tax
405405 of eight percent (8%) instead of thirty percent (30%) as used in the
406406 Internal Revenue Code, with respect to the Oklahoma taxable income
407407 of such nonresident aliens as determined under the provision of the
408408 Oklahoma Income Tax Act.
409409 Every payer of amounts covered by this subsection shall deduct
410410 and withhold from suc h amounts paid each payee an amount equal to
411411 eight percent (8%) thereof. Ever y payer required to deduct and
412412 withhold taxes under this subsection shall for each quarterly period
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439439 on or before the last day of the month following the close of each
440440 such quarterly period, pay over the amount so withheld as taxes to
441441 the Tax Commission, and shall file a return with each such payment.
442442 Such return shall be in such form as the Tax Commission shall
443443 prescribe. Every payer required under this subsection to deduct and
444444 withhold a tax from a payee shall, as to the total amounts paid to
445445 each payee during the calendar year, furnish to such payee, on or
446446 before January 31, of the succeeding year, a written statement
447447 showing the name of the payer, the name of the payee and the payee's
448448 Social Security account number, if any, the total amount paid
449449 subject to taxation, and the total amount deducted and withheld as
450450 tax and such other information as the Tax Commission may require.
451451 Any payer who fails to withhold or pay to the Tax C ommission any
452452 sums herein required to be withheld or paid shall be personally and
453453 individually liable therefor to the State of Oklahoma.
454454 E. F. Corporations. For all taxable years beginning after
455455 December 31, 2021, a tax is hereby imposed upon the Oklahom a taxable
456456 income of every corporation doing business within this state or
457457 deriving income from sources within this state in an amount equal to
458458 four percent (4%) thereof.
459459 There shall be no additional Oklahoma income tax imposed on
460460 accumulated taxable income or on undistributed personal holding
461461 company income as those terms are define d in the Internal Revenue
462462 Code.
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489489 F. G. Certain foreign corporations. In lieu of the tax imposed
490490 in the first paragraph of subsection D F of this section, for all
491491 taxable years beginning after December 31, 2021, there shall be
492492 imposed on foreign corporations, as defined in the Internal Revenue
493493 Code, a tax of four percent (4%) instead of thirty percent (30%) as
494494 used in the Internal Revenue Code, where such income is received
495495 from sources within Oklahoma, in accordance with the provisions of
496496 the Internal Revenue Code and the Oklahoma Income Tax Act.
497497 Every payer of amounts covered by this subsection shall deduct
498498 and withhold from such amounts paid each payee an amount equal to
499499 four percent (4%) thereof. Every payer required to deduct and
500500 withhold taxes under this subsection shall for each quarterly period
501501 on or before the last day of the month following the close of each
502502 such quarterly period, pay over the amount so withheld as taxes to
503503 the Tax Commission, and shall file a return with each such payment.
504504 Such return shall be in such form as the Tax Commission shall
505505 prescribe. Every payer required under this subsection to deduct and
506506 withhold a tax from a payee shall, as to the total am ounts paid to
507507 each payee during the calendar year, furnish to such payee, on or
508508 before January 31, of the succeeding year, a written statement
509509 showing the name of the payer, the name of the payee and the payee 's
510510 Social Security account number, if any, the total amounts paid
511511 subject to taxation, the total amount deducted and withheld as tax
512512 and such other information as the Tax Commission may require. Any
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539539 payer who fails to withhold or pay to the Tax Commission any sums
540540 herein required to be withheld or pai d shall be personally and
541541 individually liable therefor to the State of Oklahoma.
542542 G. H. Fiduciaries. A tax is hereby imposed upon the Oklahoma
543543 taxable income of every trust and estate at the same rates as are
544544 provided in subsection B or, C, or D of this section for single
545545 individuals. Fiduciaries are not allowed a deduction for an y
546546 federal income tax paid.
547547 H. Tax rate tables. For all taxable years beginning after
548548 December 31, 1991, in lieu of the tax imposed by subsection A, B or,
549549 C or D of this section, as applicable there is hereby imposed for
550550 each taxable year on the taxable income of every individual, whose
551551 taxable income for such taxable year does not exceed the ceiling
552552 amount, a tax determined under tables, applicable to such taxable
553553 year which shall be prescribed by the Tax Commission and which shall
554554 be in such form as it d etermines appropriate. In the table so
555555 prescribed, the amounts of the tax shall be computed on the basis of
556556 the rates prescribed by subsection A, B or, C or D of this section.
557557 For purposes of this subsection, the term "ceiling amount" means,
558558 with respect to any taxpayer, the amount determined by the Tax
559559 Commission for the tax rate category in which such taxpayer falls.
560560 SECTION 2. AMENDATORY 68 O.S. 2021 , Section 2358, as
561561 last amended by Section 155, Chapter 452, O.S.L. 2024 (68 O .S. Supp.
562562 2024, Section 2358), is amended to read as follows:
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589589 Section 2358. For all tax years beginning after December 31,
590590 1981, taxable income and adjusted gross income shall b e adjusted to
591591 arrive at Oklahoma taxable income and Oklahoma adjusted gross income
592592 as required by this section.
593593 A. The taxable income of any taxpayer shall be adjusted to
594594 arrive at Oklahoma taxable income for corporations and Oklahoma
595595 adjusted gross incom e for individuals, as follows:
596596 1. There shall be added interest income on obl igations of any
597597 state or political subdivision thereto which is not otherwise
598598 exempted pursuant to other laws of this state, to the extent that
599599 such interest is not included in t axable income and adjusted gross
600600 income.
601601 2. There shall be deducted amounts included in such income that
602602 the state is prohibited from taxing because of the provisions of the
603603 Federal Constitution, the State Constitution, federal laws or laws
604604 of Oklahoma.
605605 3. The amount of any federal net operating loss deduction shall
606606 be adjusted as follows:
607607 a. For carryovers and carrybacks to taxable years
608608 beginning before January 1, 1981, the amount of any
609609 net operating loss deduction allowed to a taxpayer for
610610 federal income tax purposes shall be reduced to an
611611 amount which is the same portion thereof as the loss
612612 from sources within this state, as determined pursuant
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639639 to this section and Section 2362 of this title, for
640640 the taxable year in which such loss is sustained is of
641641 the total loss for such year;
642642 b. For carryovers and carrybacks to taxable years
643643 beginning after December 31, 1980, the amount of any
644644 net operating loss deduction allowed for the taxable
645645 year shall be an amount equal to the aggregate of the
646646 Oklahoma net operating loss carryovers and carrybacks
647647 to such year. Oklahoma net operating losses shall be
648648 separately determined by reference to Section 172 of
649649 the Internal Revenue Code, 26 U.S.C., Section 172, as
650650 modified by the Oklahoma Income Tax Act, Section 2351
651651 et seq. of this title, and shall be allowed without
652652 regard to the existence of a f ederal net operating
653653 loss. For tax years beginning after December 31,
654654 2000, and ending before January 1, 2008, the years to
655655 which such losses may be carried shall be determined
656656 solely by reference to Section 172 of the Internal
657657 Revenue Code, 26 U.S.C., Section 172, with the
658658 exception that the terms "net operating loss" and
659659 "taxable income" shall be replaced with "Oklahoma net
660660 operating loss" and "Oklahoma taxable income ". For
661661 tax years beginning after December 31, 2007, and
662662 ending before January 1, 2009, years to which such
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689689 losses may be carried back shall be limited to two (2)
690690 years. For tax years beginning after December 31,
691691 2008, the years to which such losses may be carried
692692 back shall be determined solely by reference to
693693 Section 172 of the Internal Revenue Code, 26 U.S.C.,
694694 Section 172, with the exception that the terms "net
695695 operating loss" and "taxable income" shall be replaced
696696 with "Oklahoma net operating loss " and "Oklahoma
697697 taxable income".
698698 4. Items of the following nature shall be allocated as
699699 indicated. Allowable deductions attributable to items separately
700700 allocable in subparagraphs a, b and c of this paragraph, whether or
701701 not such items of income were actually received, shall be allocated
702702 on the same basis as those items:
703703 a. Income from real and tangible personal property, such
704704 as rents, oil and mining production or royalties, and
705705 gains or losses from sales of such property, shall be
706706 allocated in accordance with the situ s of such
707707 property;
708708 b. Income from intangible personal property, such as
709709 interest, dividends, patent or copyright royalties,
710710 and gains or losses from sales of such property, shall
711711 be allocated in accordance with the domiciliary situs
712712 of the taxpayer, excep t that:
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739739 (1) where such property has acquired a nonunitary
740740 business or commercial situs apart from the
741741 domicile of the taxpayer such income shall be
742742 allocated in accordance with such business or
743743 commercial situs; interest income from
744744 investments held to gen erate working capital for
745745 a unitary business enterprise shall be included
746746 in apportionable income; a resident trust or
747747 resident estate shall be treated as having a
748748 separate commercial or business situs insofar as
749749 undistributed income is concerned, but shal l not
750750 be treated as having a separate commercial or
751751 business situs insofar as distributed income is
752752 concerned,
753753 (2) for taxable years beginning after December 31,
754754 2003, capital or ordinary gains or losses from
755755 the sale of an ownership interest in a publicly
756756 traded partnership, as defined by Section 7704(b)
757757 of the Internal Revenue Cod e, shall be allocated
758758 to this state in the ratio of the original cost
759759 of such partnership's tangible property in this
760760 state to the original cost of such partnership 's
761761 tangible property everywhere, as determined at
762762 the time of the sale; if more than fifty percent
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789789 (50%) of the value of the partnership 's assets
790790 consists of intangible assets, capital or
791791 ordinary gains or losses from the sale of an
792792 ownership interest in the partnership shall be
793793 allocated to this state in accordance with the
794794 sales factor of the p artnership for its first
795795 full tax period immediately preceding its tax
796796 period during which the ownership interest in the
797797 partnership was sold; the provisions of this
798798 division shall only apply if the capital or
799799 ordinary gains or losses from the sale of an
800800 ownership interest in a partnership do not
801801 constitute qualifying gain receiving capital
802802 treatment as defined in subparagraph a of
803803 paragraph 2 of subsection F of this section,
804804 (3) income from such property which is required to be
805805 allocated pursuant to the pr ovisions of paragraph
806806 5 of this subsection shall be allocated as herein
807807 provided;
808808 c. Net income or loss from a business activity which is
809809 not a part of business carried on within or without
810810 the state of a unitary character shall be separately
811811 allocated to the state in which such activity is
812812 conducted;
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839839 d. In the case of a manufacturing or processing
840840 enterprise the business of which in Oklahoma consists
841841 solely of marketing its produ cts by:
842842 (1) sales having a situs without this state, shipped
843843 directly to a point from without the state to a
844844 purchaser within the state, commonly known as
845845 interstate sales,
846846 (2) sales of the product stored in public warehouses
847847 within the state pursuant to "in transit"
848848 tariffs, as prescribed and allowed by the
849849 Interstate Commerce Commission, to a purchaser
850850 within the state,
851851 (3) sales of the product stored in public warehouses
852852 within the state where the shipment to such
853853 warehouses is not covered by "in transit"
854854 tariffs, as prescribed and allowed by the
855855 Interstate Commerce Commission, to a purchaser
856856 within or without the state,
857857 the Oklahoma net income shall, at the option of the
858858 taxpayer, be that portion of the total net income of
859859 the taxpayer for federal income tax purposes derived
860860 from the manufacture and/or processing and sales
861861 everywhere as determined by the ratio of the sales
862862 defined in this section made to the purchaser within
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889889 the state to the total sales everywhere. The term
890890 "public warehouse" as used in this subparagraph means
891891 a licensed public warehouse, the principal business of
892892 which is warehousing merchandise for the public;
893893 e. In the case of insurance companies, Oklahoma taxable
894894 income shall be taxable income of the taxpayer for
895895 federal tax purposes, as adjusted for the adjustments
896896 provided pursuant to the provisions of paragraphs 1
897897 and 2 of this subsection, apportioned as follows:
898898 (1) except as otherwise provided by division (2) of
899899 this subparagraph, taxable income of an insurance
900900 company for a taxable year shall be apportioned
901901 to this state by multiplying such income by a
902902 fraction, the numerator of which is the direct
903903 premiums written for insurance on property or
904904 risks in this state, and the denominator of which
905905 is the direct premiums written for ins urance on
906906 property or risks everywhere. For purposes of
907907 this subsection, the term "direct premiums
908908 written" means the total amount of direct
909909 premiums written, assessments and annuity
910910 considerations as reported for the taxable year
911911 on the annual statement filed by the company with
912912 the Insurance Commissioner in the form approved
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939939 by the National Association of Insurance
940940 Commissioners, or such other form as may be
941941 prescribed in lieu thereof,
942942 (2) if the principal source of premiums written by an
943943 insurance company consists of premiums for
944944 reinsurance accepted by it, the taxable income of
945945 such company shall be apportioned to this state
946946 by multiplying such income by a fraction, the
947947 numerator of which is the sum of (a) direct
948948 premiums written for insurance on proper ty or
949949 risks in this state, plus (b) premiums written
950950 for reinsurance accepted in respect of property
951951 or risks in this state, and the denominator of
952952 which is the sum of (c) direct premiums written
953953 for insurance on property or risks everywhere,
954954 plus (d) premiums written for reinsurance
955955 accepted in respect of property or risks
956956 everywhere. For purposes of this paragraph,
957957 premiums written for reinsurance accepted in
958958 respect of property or risks in this state,
959959 whether or not otherwise determinable, may at the
960960 election of the company be determined on the
961961 basis of the proportion which premi ums written
962962 for insurance accepted from companies
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989989 commercially domiciled in Oklahoma bears to
990990 premiums written for reinsurance accepted from
991991 all sources, or alternatively in the proportion
992992 which the sum of the direct premiums written for
993993 insurance on property or risks in this state by
994994 each ceding company from which reinsurance is
995995 accepted bears to the sum of the total direct
996996 premiums written by each such ceding company for
997997 the taxable year.
998998 5. The net income or loss remaining after the separate
999999 allocation in paragraph 4 of this subsection, being that which is
10001000 derived from a unitary business enterprise, shall be apportioned to
10011001 this state on the basis of the arithmetical average of three factors
10021002 consisting of property, payroll and sales or gross revenue
10031003 enumerated as subparagraphs a, b and c of this paragraph. Net
10041004 income or loss as used in this paragraph includes that derived from
10051005 patent or copyright royalties, purchase discounts, a nd interest on
10061006 accounts receivable relating to or arising from a business acti vity,
10071007 the income from which is apportioned pursuant to this subsection,
10081008 including the sale or other disposition of such property and any
10091009 other property used in the unitary enterp rise. Deductions used in
10101010 computing such net income or loss shall not include taxes based on
10111011 or measured by income. Provided, for corporations whose property
10121012 for purposes of the tax imposed by Section 2355 of this title has an
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10391039 initial investment cost equa ling or exceeding Two Hundred Million
10401040 Dollars ($200,000,000.00) and such inves tment is made on or after
10411041 July 1, 1997, or for corporations which expand their property or
10421042 facilities in this state and such expansion has an investment cost
10431043 equaling or exceedin g Two Hundred Million Dollars ($200,000,000.00)
10441044 over a period not to exceed three (3) years, and such expansion is
10451045 commenced on or after January 1, 2000, the three factors shall be
10461046 apportioned with property and payroll, each comprising twenty -five
10471047 percent (25%) of the apportionment factor and sales comprising fifty
10481048 percent (50%) of the apportionment factor. The apportionment
10491049 factors shall be computed as follows:
10501050 a. The property factor is a fraction, the numerator of
10511051 which is the average value of the taxpay er's real and
10521052 tangible personal property owned or rented and used in
10531053 this state during the tax period and the denominator
10541054 of which is the average value of all the taxpayer 's
10551055 real and tangible personal property everywhere owned
10561056 or rented and used during the tax period.
10571057 (1) Property, the income from which is separately
10581058 allocated in paragraph 4 of this subsection,
10591059 shall not be included in determining this
10601060 fraction. The numerator of the fraction shall
10611061 include a portion of the investment in
10621062 transportation and o ther equipment having no
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10891089 fixed situs, such as rolling stock, buses, trucks
10901090 and trailers, including machinery and equipment
10911091 carried thereon, airplanes, salespersons '
10921092 automobiles and other similar equipment, in the
10931093 proportion that miles traveled in Oklahoma by
10941094 such equipment bears to total miles traveled,
10951095 (2) Property owned by the tax payer is valued at its
10961096 original cost. Property rented by the taxpayer
10971097 is valued at eight times the net annual rental
10981098 rate. Net annual rental rate is the annual
10991099 rental rate paid by the taxpayer, less any annual
11001100 rental rate received by the taxpayer from
11011101 subrentals,
11021102 (3) The average value of property shall be determined
11031103 by averaging the values at the beginning and
11041104 ending of the tax period but the Oklahoma Tax
11051105 Commission may require the averaging of monthly
11061106 values during the tax period if reasonably
11071107 required to reflect properly the average value of
11081108 the taxpayer's property;
11091109 b. The payroll factor is a fraction, the numerator of
11101110 which is the total compensation for services rendered
11111111 in the state during the tax period, and the
11121112 denominator of which is the total compensation for
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11391139 services rendered everywhere during the tax period.
11401140 "Compensation", as used in this subsection means those
11411141 paid-for services to the extent related to the unitary
11421142 business but does not include officers ' salaries,
11431143 wages and other compensation.
11441144 (1) In the case of a transportation enterprise, the
11451145 numerator of the fraction shall include a portion
11461146 of such expenditure in connection with employees
11471147 operating equipment over a f ixed route, such as
11481148 railroad employees, airline pilots, or bus
11491149 drivers, in this state only a part of the time,
11501150 in the proportion that mileage traveled in
11511151 Oklahoma bears to total mileage traveled by such
11521152 employees,
11531153 (2) In any case the numerator of the fract ion shall
11541154 include a portion of such expenditures in
11551155 connection with itinerant employees, such as
11561156 traveling salespersons, in this state only a part
11571157 of the time, in the proportion that time spent in
11581158 Oklahoma bears to total time spent in furtherance
11591159 of the enterprise by such employees;
11601160 c. The sales factor is a fraction, the numerator of which
11611161 is the total sales or gross revenue of the taxpayer in
11621162 this state during the tax period, and the denominator
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11891189 of which is the total sales or gross revenue of the
11901190 taxpayer everywhere during the tax period. "Sales",
11911191 as used in this subsection does no t include sales or
11921192 gross revenue which are separately allocated in
11931193 paragraph 4 of this subsection.
11941194 (1) Sales of tangible personal property have a situs
11951195 in this state if the prope rty is delivered or
11961196 shipped to a purchaser other than the United
11971197 States government, within this state regardless
11981198 of the FOB point or other conditions of the sale;
11991199 or the property is shipped from an office, store,
12001200 warehouse, factory or other place of storag e in
12011201 this state and (a) the purchaser is the United
12021202 States government or (b) t he taxpayer is not
12031203 doing business in the state of the destination of
12041204 the shipment.
12051205 (2) In the case of a railroad or interurban railway
12061206 enterprise, the numerator of the fraction s hall
12071207 not be less than the allocation of revenues to
12081208 this state as shown in its annual report to the
12091209 Corporation Commission.
12101210 (3) In the case of an airline, truck or bus
12111211 enterprise or freight car, tank car, refrigerator
12121212 car or other railroad equipment enterp rise, the
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12391239 numerator of the fraction shall include a portion
12401240 of revenue from interstate transportation in the
12411241 proportion that interstate mileage traveled in
12421242 Oklahoma bears to total interstate mileage
12431243 traveled.
12441244 (4) In the case of an oil, gasoline or gas pipe line
12451245 enterprise, the numerator of the fraction shall
12461246 be either the total of traffic units of the
12471247 enterprise within Oklahoma or the revenue
12481248 allocated to Oklahoma based upon miles moved, at
12491249 the option of the taxpayer, and the denominator
12501250 of which shall be th e total of traffic units of
12511251 the enterprise or the revenue of the enterprise
12521252 everywhere as appropriate to the numerator. A
12531253 "traffic unit" is hereby defined as the
12541254 transportation for a distance of one (1) mile of
12551255 one (1) barrel of oil, one (1) gallon of gas oline
12561256 or one thousand (1,000) cubic feet of natural or
12571257 casinghead gas, as the case may be.
12581258 (5) In the case of a telephone or telegraph or other
12591259 communication enterprise, the numerator of the
12601260 fraction shall include that portion of the
12611261 interstate revenue as is allocated pursuant to
12621262 the accounting procedures prescribed by the
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12891289 Federal Communications Commission; provided that
12901290 in respect to each corporation or business entity
12911291 required by the Federal Communications Commission
12921292 to keep its books and records in accor dance with
12931293 a uniform system of accounts prescribed by such
12941294 Commission, the intrastate net income shall be
12951295 determined separately in the manner provided by
12961296 such uniform system of accounts and only the
12971297 interstate income shall be subject to allocation
12981298 pursuant to the provisions of this subsection.
12991299 Provided further, that the gross reven ue factors
13001300 shall be those as are determined pursuant to the
13011301 accounting procedures prescribed by the Federal
13021302 Communications Commission.
13031303 In any case where the apportionment of the three factors
13041304 prescribed in this paragraph attributes to Oklahoma a portion of net
13051305 income of the enterprise out of all appropriate proportion to the
13061306 property owned and/or business transacted within this state, because
13071307 of the fact that one or more of the fa ctors so prescribed are not
13081308 employed to any appreciable extent in furtherance of the enterprise;
13091309 or because one or more factors not so prescribed are employed to a
13101310 considerable extent in furtherance of the enterprise; or because of
13111311 other reasons, the Tax C ommission is empowered to permit, after a
13121312 showing by taxpayer that an excessive portion of net income has been
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13391339 attributed to Oklahoma, or require, when in its judgment an
13401340 insufficient portion of net income has been attributed to Oklahoma,
13411341 the elimination, substitution, or use of additional factors, or
13421342 reduction or increase in the we ight of such prescribed factors.
13431343 Provided, however, that any such variance from such prescribed
13441344 factors which has the effect of increasing the portion of net income
13451345 attributable to Oklahoma must not be inherently arbitrary, and
13461346 application of the recomputed final apportionment to the net income
13471347 of the enterprise must attribute to Oklahoma only a reasonable
13481348 portion thereof.
13491349 6. For calendar years 1997 and 1998, the owner of a new or
13501350 expanded agricultural commodity processing facility in this state
13511351 may exclude from Oklahoma taxable income, or in the case of an
13521352 individual, the Oklahoma adjusted gross income, fifteen percent
13531353 (15%) of the investment by the owner in the new or expanded
13541354 agricultural commodity processing facility. For calendar year 1999,
13551355 and all subsequent years, the percentage, not to exceed fifteen
13561356 percent (15%), available to the owner of a new or expanded
13571357 agricultural commodity processing facility in this state claimin g
13581358 the exemption shall be adjusted annually so that the total estimated
13591359 reduction in tax liability does not exceed One Million Dollars
13601360 ($1,000,000.00) annually. The Tax Commission shall promulgate rules
13611361 for determining the percentage of the investment whic h each eligible
13621362 taxpayer may exclude. The exclusion provided by this paragraph
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13891389 shall be taken in the taxable year when the investment is made. In
13901390 the event the total reduction in tax liability authorized by this
13911391 paragraph exceeds One Million Dollars ($1, 000,000.00) in any
13921392 calendar year, the Tax Commission shall permit any excess o ver One
13931393 Million Dollars ($1,000,000.00) and shall factor such excess into
13941394 the percentage for subsequent years. Any amount of the exemption
13951395 permitted to be excluded pursuant to t he provisions of this
13961396 paragraph but not used in any year may be carried forward as an
13971397 exemption from income pursuant to the provisions of this paragraph
13981398 for a period not exceeding six (6) years following the year in which
13991399 the investment was originally made .
14001400 For purposes of this paragraph:
14011401 a. "Agricultural commodity processing facili ty" means
14021402 building, structures, fixtures and improvements used
14031403 or operated primarily for the processing or production
14041404 of marketable products from agricultural commodities.
14051405 The term shall also mean a dairy operation that
14061406 requires a depreciable investment of at least Two
14071407 Hundred Fifty Thousand Dollars ($250,000.00) and which
14081408 produces milk from dairy cows. The term does not
14091409 include a facility that provides only, and nothing
14101410 more than, storage, cleaning, drying or transportation
14111411 of agricultural commodities, a nd
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14381438 b. "Facility" means each part of the facility which is
14391439 used in a process primarily for:
14401440 (1) the processing of agricultural commodities,
14411441 including receiving or storing agricult ural
14421442 commodities, or the production of milk at a dairy
14431443 operation,
14441444 (2) transporting the agricultural commodities or
14451445 product before, during or after the processing,
14461446 or
14471447 (3) packaging or otherwise preparing the product for
14481448 sale or shipment.
14491449 7. Despite any provision to the contrary in paragraph 3 of this
14501450 subsection, for taxable years be ginning after December 31, 1999, in
14511451 the case of a taxpayer which has a farming loss, such farming loss
14521452 shall be considered a net operating loss carryback in accordance
14531453 with and to the extent of the Internal Revenue Code, 26 U.S.C.,
14541454 Section 172(b)(G). However, the amount of the net operating loss
14551455 carryback shall not exceed the lesser of:
14561456 a. Sixty Thousand Dollars ($60,000.00), or
14571457 b. the loss properly shown on Schedule F of the Int ernal
14581458 Revenue Service Form 1040 reduced by one -half (1/2) of
14591459 the income from all other sources other than reflected
14601460 on Schedule F.
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14871487 8. In taxable years beginning after December 31, 1995, all
14881488 qualified wages equal to the federal income tax credit set forth in
14891489 26 U.S.C.A., Section 45A, shall be deducted from taxable income.
14901490 The deduction allowed pursuant to this paragraph shall only be
14911491 permitted for the tax years in which the federal tax credit pursuant
14921492 to 26 U.S.C.A., Section 45A, is allowed. For purposes of this
14931493 paragraph, "qualified wages" means those wages used to calculate the
14941494 federal credit pursuant to 26 U.S.C.A., Section 45A.
14951495 9. In taxable years beginning after December 31, 2005, an
14961496 employer that is eligible for and utilizes the Safety Pays OSHA
14971497 Consultation Service provided by the Oklahoma Department of Labor
14981498 shall receive an exemption from taxable income in the amount of One
14991499 Thousand Dollars ($1,000.00) for the tax year that the service is
15001500 utilized.
15011501 10. For taxable years beginning on or after Janu ary 1, 2010,
15021502 there shall be added to Oklahoma taxable income an amount equal t o
15031503 the amount of deferred income not included in such taxable income
15041504 pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986
15051505 as amended by Section 1231 of the American Recovery and Reinvestment
15061506 Act of 2009 (P.L. No. 111 -5). There shall be subtracted from
15071507 Oklahoma taxable income an amount equal to the amount of deferred
15081508 income included in such taxable income pursuant to Section 108(i)(1)
15091509 of the Internal Revenue Code by S ection 1231 of the American
15101510 Recovery and Reinvestment Act of 2009 (P.L. No. 11 1-5).
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15371537 11. For taxable years beginning on or after January 1, 2019,
15381538 there shall be subtracted from Oklahoma taxable income or adjusted
15391539 gross income any item of income or gain, an d there shall be added to
15401540 Oklahoma taxable income or adjusted gross income any item of loss or
15411541 deduction that in the absence of an election pursuant to the
15421542 provisions of the Pass -Through Entity Tax Equity Act of 2019 would
15431543 be allocated to a member or to an indirect member of an electing
15441544 pass-through entity pursuant to Section 2351 e t seq. of this title,
15451545 if (i) the electing pass -through entity has accounted for such item
15461546 in computing its Oklahoma net entity income or loss pursuant to the
15471547 provisions of the Pa ss-Through Entity Tax Equity Act of 2019, and
15481548 (ii) the total amount of tax attributable to any resulting Oklahoma
15491549 net entity income has been paid. The Oklahoma Tax Commission shall
15501550 promulgate rules for the reporting of such exclusion to direct and
15511551 indirect members of the electing pass -through entity. As used in
15521552 this paragraph, "electing pass-through entity", "indirect member",
15531553 and "member" shall be defined in the same manner as prescribed by
15541554 Section 2355.1P-2 of this title. Notwithstanding the applicatio n of
15551555 this paragraph, the adjusted tax basis of any ownership interest in
15561556 a pass-through entity for purposes of Section 2351 et seq. of this
15571557 title shall be equal to its adjusted tax basis for federal income
15581558 tax purposes.
15591559 B. 1. The taxable income of any co rporation shall be further
15601560 adjusted to arrive at Oklahoma taxable income, exce pt those
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15871587 corporations electing treatment as provided in subchapter S of the
15881588 Internal Revenue Code, 26 U.S.C., Section 1361 et seq., and Section
15891589 2365 of this title, deductions pur suant to the provisions of the
15901590 Accelerated Cost Recovery System as defined and allowed in the
15911591 Economic Recovery Tax Act of 1981, Public Law 97 -34, 26 U.S.C.,
15921592 Section 168, for depreciation of assets placed into service after
15931593 December 31, 1981, shall not be allowed in calculating Oklahoma
15941594 taxable income. Such corporations shall be al lowed a deduction for
15951595 depreciation of assets placed into service after December 31, 1981,
15961596 in accordance with provisions of the Internal Revenue Code, 26
15971597 U.S.C., Section 1 et seq. , in effect immediately prior to the
15981598 enactment of the Accelerated Cost Recovery System. The Oklahoma tax
15991599 basis for all such assets placed into service after December 31,
16001600 1981, calculated in this section shall be retained and utilized for
16011601 all Oklahoma income tax purposes through the final disposition of
16021602 such assets.
16031603 Notwithstanding any other provisions of the Oklahoma Income Tax
16041604 Act, Section 2351 et seq. of this title, or of the Internal Revenue
16051605 Code to the contrary, this subsection shall control calculatio n of
16061606 depreciation of assets placed into service after December 31, 1981,
16071607 and before January 1, 1983.
16081608 For assets placed in service and held by a corporation in which
16091609 accelerated cost recovery system was previously disallowed, an
16101610 adjustment to taxable income is required in the first taxable year
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16371637 beginning after December 31, 1982, to r econcile the basis of such
16381638 assets to the basis allowed in the Internal Revenue Code. The
16391639 purpose of this adjustment is to equalize the basis and allowance
16401640 for depreciation accou nts between that reported to the Internal
16411641 Revenue Service and that reported to Oklahoma.
16421642 2. For tax years beginning on or after January 1, 2009, and
16431643 ending on or before December 31, 2009, there shall be added to
16441644 Oklahoma taxable income any amount in exces s of One Hundred Seventy -
16451645 five Thousand Dollars ($175,000.00) which has been de ducted as a
16461646 small business expense under Internal Revenue Code, Section 179 as
16471647 provided in the American Recovery and Reinvestment Act of 2009.
16481648 C. 1. For taxable years beginning after December 31, 1987, the
16491649 taxable income of any corporation shall be further adjusted to
16501650 arrive at Oklahoma taxable income for transfers of technology to
16511651 qualified small businesses located in Oklahoma. Such transferor
16521652 corporation shall be allowed an e xemption from taxable income of an
16531653 amount equal to the amount of royalty payme nt received as a result
16541654 of such transfer; provided, however, such amount shall not exceed
16551655 ten percent (10%) of the amount of gross proceeds received by such
16561656 transferor corporatio n as a result of the technology transfer. Such
16571657 exemption shall be allowed for a period not to exceed ten (10) years
16581658 from the date of receipt of the first royalty payment accruing from
16591659 such transfer. No exemption may be claimed for transfers of
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16861686 technology to qualified small businesses made prior to January 1,
16871687 1988.
16881688 2. For purposes of this subsection:
16891689 a. "Qualified small business " means an entity, whether
16901690 organized as a corporation, partnership, or
16911691 proprietorship, organized for profit with its
16921692 principal place of business located within this state
16931693 and which meets the following criteria:
16941694 (1) Capitalization of not more than Two Hundred Fifty
16951695 Thousand Dollars ($250,000.00),
16961696 (2) Having at least fifty percent (50%) of its
16971697 employees and assets located in Oklahoma at the
16981698 time of the transfer, and
16991699 (3) Not a subsidiary or affiliate of the tran sferor
17001700 corporation;
17011701 b. "Technology" means a proprietary process, formula,
17021702 pattern, device or compilation of scientific or
17031703 technical information which is not in the public
17041704 domain;
17051705 c. "Transferor corporation " means a corporation which is
17061706 the exclusive and undisputed owner of the technology
17071707 at the time the transfer is made; and
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17341734 d. "Gross proceeds" means the total amount of
17351735 consideration for the transfer of technology, whether
17361736 the consideration is in money or otherwise.
17371737 D. 1. For taxable years beginning after December 31, 2005, the
17381738 taxable income of any corporation, estate or trust, shall be further
17391739 adjusted for qualifying gains receiving capital treatment. Such
17401740 corporations, estate s or trusts shall be allowed a deduction from
17411741 Oklahoma taxable income for the amount of qualifying gains receiving
17421742 capital treatment earned by the corporation, estate or trust during
17431743 the taxable year and included in the federal taxable income of such
17441744 corporation, estate or trust.
17451745 2. As used in this subsection:
17461746 a. "qualifying gains receiving capital treatment " means
17471747 the amount of net capital gains, as defined in Section
17481748 1222(11) of the Internal Revenue Code, included in the
17491749 federal income tax return of the corporation, estate
17501750 or trust that result from:
17511751 (1) the sale of real property or tangible personal
17521752 property located within Oklahoma that has been
17531753 directly or indirectly owned by the corporation,
17541754 estate or trust for a holding period of at least
17551755 five (5) years prior to the date of the
17561756 transaction from which such net capital gains
17571757 arise,
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17841784 (2) the sale of stock or on the sale of an ownership
17851785 interest in an Oklahoma company, limited
17861786 liability company, or partnership where such
17871787 stock or ownership interest has been directly or
17881788 indirectly owned by the corporation, estate or
17891789 trust for a holding period of at least three (3)
17901790 years prior to the date of the transaction from
17911791 which the net capital gains arise, or
17921792 (3) the sale of real property, tangible personal
17931793 property or intangible personal property located
17941794 within Oklahoma as part of the sale of all or
17951795 substantially all of the assets of an Oklahoma
17961796 company, limited liability company, or
17971797 partnership where such property has been directly
17981798 or indirectly owned by such entity own ed by the
17991799 owners of such entity, and used in or derived
18001800 from such entity for a period of at least three
18011801 (3) years prior to the date of the transaction
18021802 from which the net capital gains arise,
18031803 b. "holding period" means an uninterrupted period of
18041804 time. The holding period shall include any additional
18051805 period when the property was held b y another
18061806 individual or entity, if such additional period is
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18331833 included in the taxpayer 's holding period for the
18341834 asset pursuant to the Internal Revenue Code,
18351835 c. "Oklahoma company", "limited liability company ", or
18361836 "partnership" means an entity whose primary
18371837 headquarters have been located in Oklahoma for at
18381838 least three (3) uninterrupted years prior to the date
18391839 of the transaction from which the net capital gains
18401840 arise,
18411841 d. "direct" means the taxpayer directly owns the asset,
18421842 and
18431843 e. "indirect" means the taxpayer o wns an interest in a
18441844 pass-through entity (or chain of pass -through
18451845 entities) that sells the asset that gives rise to the
18461846 qualifying gains receiving capital treatment.
18471847 (1) With respect to sales of real property or
18481848 tangible personal property located within
18491849 Oklahoma, the deduction described in this
18501850 subsection shall not apply unless the pass -
18511851 through entity that makes the sale has held the
18521852 property for not less than five (5) uninterrup ted
18531853 years prior to the date of the transaction that
18541854 created the capital gain, and each pass-through
18551855 entity included in the chain of ownership has
18561856 been a member, partner, or shareholder of the
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18831883 pass-through entity in the tier immediately below
18841884 it for an uninterrupted period of not less than
18851885 five (5) years.
18861886 (2) With respect to sales of stock or ownership
18871887 interest in or sales of all or substantially all
18881888 of the assets of an Oklahoma company, limited
18891889 liability company, or partnership, the deduction
18901890 described in this subsection shall not apply
18911891 unless the pass-through entity that makes the
18921892 sale has held the stock or ownership interest or
18931893 the assets for not less than three (3)
18941894 uninterrupted years prior to the date of the
18951895 transaction that created the capital gain, and
18961896 each pass-through entity included in the chain of
18971897 ownership has been a member, partner or
18981898 shareholder of the pass -through entity in the
18991899 tier immediately below it for an uninterrupted
19001900 period of not less than three (3) years.
19011901 E. The Oklahoma adjusted gross income of any individual
19021902 taxpayer shall be further adjusted as follows to arr ive at Oklahoma
19031903 taxable income:
19041904 1. a. In the case of individuals, there shall be added or
19051905 deducted, as the case may be, the difference necessary
19061906 to allow personal exemptions of O ne Thousand Dollars
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19321932
19331933 ($1,000.00) in lieu of the personal exemptions allowed
19341934 by the Internal Revenue Code.
19351935 b. There shall be allowed an additional exemption of One
19361936 Thousand Dollars ($1,000.00) for each taxpayer or
19371937 spouse who is blind at the close of the tax year. For
19381938 purposes of this subparagraph, an individual is blind
19391939 only if the central visual acuity of the individual
19401940 does not exceed 20/200 in the better eye with
19411941 correcting lenses, or if the visual acuity of the
19421942 individual is greater than 20/200, but is a ccompanied
19431943 by a limitation in the fields of vision such that the
19441944 widest diameter of the visual field subtends an angle
19451945 no greater than twenty (20) degrees.
19461946 c. There shall be allowed an additional exemption of One
19471947 Thousand Dollars ($1,000.00) for each taxpa yer or
19481948 spouse who is sixty-five (65) years of age or older at
19491949 the close of the tax year based upon the filing status
19501950 and federal adjusted gross income of the taxpayer.
19511951 Taxpayers with the following filing status may claim
19521952 this exemption if the federal adju sted gross income
19531953 does not exceed:
19541954 (1) Twenty-five Thousand Dollars ($25,000.00) if
19551955 married and filing jointly,
19561956
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19821982 (2) Twelve Thousand Five Hundred Dollars ($12,500.00)
19831983 if married and filing separately,
19841984 (3) Fifteen Thousand Dollars ($15,000.00) if single,
19851985 and
19861986 (4) Nineteen Thousand Dollars ($19,000.00) if a
19871987 qualifying head of household.
19881988 Provided, for taxable years beginning after December
19891989 31, 1999, amounts included in the calculation of
19901990 federal adjusted gross income pursuant to the
19911991 conversion of a traditional i ndividual retirement
19921992 account to a Roth individual retirement account shall
19931993 be excluded from federal adjusted gross income for
19941994 purposes of the income thresholds provided in this
19951995 subparagraph.
19961996 2. a. For taxable years beginning on or before December 31,
19971997 2005, in the case of individuals who use the standard
19981998 deduction in determining taxa ble income, there shall
19991999 be added or deducted, as the case may be, the
20002000 difference necessary to allow a standard deduction in
20012001 lieu of the standard deduction allowed by the Internal
20022002 Revenue Code, in an amount equal to the larger of
20032003 fifteen percent (15%) of the Oklahoma adjusted gross
20042004 income or One Thousand Dollars ($1,000.00), but not to
20052005 exceed Two Thousand Dollars ($2,000.00), except that
20062006
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20322032 in the case of a married individual filing a separate
20332033 return such deduction shall be the larger of fifteen
20342034 percent (15%) of such Oklahoma adjusted gross income
20352035 or Five Hundred Dollars ($500.00), but not to exceed
20362036 the maximum amount of One Thousand Dollars
20372037 ($1,000.00).
20382038 b. For taxable years beginning on or after January 1,
20392039 2006, and before January 1, 2007, in the case of
20402040 individuals who use the standard deduction in
20412041 determining taxable income, there shall be added or
20422042 deducted, as the case may be, the difference necessary
20432043 to allow a standard deduction i n lieu of the standard
20442044 deduction allowed by the Internal Revenue Code, in an
20452045 amount equal to:
20462046 (1) Three Thousand Dollars ($3,000.00), if the filing
20472047 status is married filing joint, head of household
20482048 or qualifying widow, or
20492049 (2) Two Thousand Dollars ($2,000.0 0), if the filing
20502050 status is single or married filing separate.
20512051 c. For the taxable year beginning on January 1, 2007, and
20522052 ending December 31, 2007, in the case of individuals
20532053 who use the standard deduction in determining taxable
20542054 income, there shall be added or deducted, as the case
20552055 may be, the difference necessary to allow a standard
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20822082 deduction in lieu of the standard deduction allowed by
20832083 the Internal Revenue Code, in an amount equal to:
20842084 (1) Five Thousand Five Hundred Dollars ($5,500.00),
20852085 if the filing status is married filing joint or
20862086 qualifying widow, or
20872087 (2) Four Thousand One Hundred Twenty -five Dollars
20882088 ($4,125.00) for a head of household, or
20892089 (3) Two Thousand Seven Hundred Fifty Dollars
20902090 ($2,750.00), if the filing status is single or
20912091 married filing separate.
20922092 d. For the taxable year beginning on January 1, 2008, and
20932093 ending December 31, 2008, in the case of individuals
20942094 who use the standard deduction in determining taxable
20952095 income, there shall be added or deducted, as the case
20962096 may be, the difference necessary to a llow a standard
20972097 deduction in lieu of the standard deduction allowed by
20982098 the Internal Revenue Code, in an amount equal to:
20992099 (1) Six Thousand Five Hundred Dollars ($6,500.00), if
21002100 the filing status is married filing joint or
21012101 qualifying widow,
21022102 (2) Four Thousand Eight Hundred Seventy -five Dollars
21032103 ($4,875.00) for a head of household, or
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21302130 (3) Three Thousand Two Hundred Fifty Dollars
21312131 ($3,250.00), if the filing status is single or
21322132 married filing separate.
21332133 e. For the taxable year beginning on January 1, 2009, and
21342134 ending December 31, 2009, in the case of individuals
21352135 who use the standard deduction in determining taxable
21362136 income, there shall be added or deducted, as the case
21372137 may be, the difference necessary to allow a standard
21382138 deduction in lieu of the standard deduction allo wed by
21392139 the Internal Revenue Code, in an amount equal to:
21402140 (1) Eight Thousand Five Hundred Dollars ($8,500.00),
21412141 if the filing status is married filing joint or
21422142 qualifying widow,
21432143 (2) Six Thousand Three Hundred Seventy -five Dollars
21442144 ($6,375.00) for a head of ho usehold, or
21452145 (3) Four Thousand Two Hundred Fifty Dollars
21462146 ($4,250.00), if the filing status is single or
21472147 married filing separate.
21482148 Oklahoma adjusted gross income shall be increased by
21492149 any amounts paid for motor vehicle excise taxes which
21502150 were deducted as allo wed by the Internal Revenue Code.
21512151 f. For taxable years beginning on or after J anuary 1,
21522152 2010, and ending on December 31, 2016, in the case of
21532153 individuals who use the standard deduction in
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21802180 determining taxable income, there shall be added or
21812181 deducted, as the case may be, the difference necessary
21822182 to allow a standard deduction equal to the standard
21832183 deduction allowed by the Internal Revenue Code, based
21842184 upon the amount and filing status prescribed by such
21852185 Code for purposes of filing federal individual income
21862186 tax returns.
21872187 g. For taxable years beginning on or after January 1,
21882188 2017, and ending December 31, 2025, in the case of
21892189 individuals who use the standard deduction in
21902190 determining taxable income, there shall be added or
21912191 deducted, as the case may be, the difference necessary
21922192 to allow a standard deduction in lieu of the standard
21932193 deduction allowed by the Internal Revenue Code, as
21942194 follows:
21952195 (1) Six Thousand Three Hundred Fifty Dollars
21962196 ($6,350.00) for single or married filing
21972197 separately,
21982198 (2) Twelve Thousand Seven Hundred Dollars
21992199 ($12,700.00) for married filing jointly or
22002200 qualifying widower with de pendent child, and
22012201 (3) Nine Thousand Three Hundred Fifty Dollars
22022202 ($9,350.00) for head of household.
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22292229 h. For taxable years beginning on or after January 1,
22302230 2026, in the case of ind ividuals who use the standard
22312231 deduction in determining taxable income, there shall
22322232 be added or deducted, as the case may be, the
22332233 difference necessary to allow a standard deduction in
22342234 lieu of the standard deduction allowed by the Internal
22352235 Revenue Code, as follows:
22362236 (1) Ten Thousand Three Hundred Fifty Dollars
22372237 ($10,350.00) for single o r married filing
22382238 separately,
22392239 (2) Twenty Thousand Seven Hundred Dollars
22402240 ($20,700.00) for married filing jointly or
22412241 qualifying widower with dependent child, and
22422242 (3) Fifteen Thousand Three Hundred Dollars
22432243 ($15,300.00) for head of household.
22442244 3. a. In the case of resident and part -year resident
22452245 individuals having adjusted gross income from sources
22462246 both within and without the state, the itemized or
22472247 standard deductions and personal exemp tions shall be
22482248 reduced to an amount which is the same portion of the
22492249 total thereof as Oklahoma adjusted gross income is of
22502250 adjusted gross income. To the extent itemized
22512251 deductions include allowable moving expense, proration
22522252 of moving expense shall not be required or permitted
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22792279 but allowable moving expense shall be fully deductible
22802280 for those taxpayers moving within or into Oklahoma and
22812281 no part of moving expense shall be deductible for
22822282 those taxpayers moving without or out of Oklahoma.
22832283 All other itemized or standard deductions and personal
22842284 exemptions shall be subject to proration as p rovided
22852285 by law.
22862286 b. For taxable years beginning on or after January 1,
22872287 2018, the net amount of itemized deductions allowable
22882288 on an Oklahoma income tax return, subject to the
22892289 provisions of paragraph 24 of this subsection, shall
22902290 not exceed Seventeen Thousand Dollars ($17,000.00).
22912291 For purposes of this subparagraph, charitable
22922292 contributions and medical expenses deductible for
22932293 federal income tax purposes shall be excluded from the
22942294 amount of Seventeen Thousand Dollars ($17,000.00) as
22952295 specified by this subparagrap h.
22962296 4. A resident individual with a physical disability
22972297 constituting a substantial handicap to employment may deduct from
22982298 Oklahoma adjusted gross income such expenditures to modi fy a motor
22992299 vehicle, home or workplace as are necessary to compensate for his or
23002300 her handicap. A veteran certified by the Department of Veterans
23012301 Affairs of the federal government as having a service -connected
23022302 disability shall be conclusively presumed to be an individual with a
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23292329 physical disability constituting a substantial handicap to
23302330 employment. The Tax Commission shall promulgate rules containing a
23312331 list of combinations of common disabilities and modifications which
23322332 may be presumed to qualify for this ded uction. The Tax Commission
23332333 shall prescribe necessary requirements for verification.
23342334 5. a. Before July 1, 2010, the first One Thousand Five
23352335 Hundred Dollars ($1,500.00) received by any person
23362336 from the United States as salary or compensation in
23372337 any form, other than retirement benefits, as a member
23382338 of any component of the Armed Forces of the United
23392339 States shall be deducted from taxable income.
23402340 b. On or after July 1, 2010, one hundred percent (100%)
23412341 of the income received by any person from the United
23422342 States as salary or compensation in any form, other
23432343 than retirement benefits, as a member of any component
23442344 of the Armed Forces of the United States shall be
23452345 deducted from taxable income.
23462346 c. Whenever the filing of a timely income tax return by a
23472347 member of the Armed Forces of the United States is
23482348 made impracticable or impossible of accomplishm ent by
23492349 reason of:
23502350 (1) absence from the United States, which term
23512351 includes only the states and the District of
23522352 Columbia,
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23792379 (2) absence from the State of Oklahoma while on
23802380 active duty, or
23812381 (3) confinement in a hospital within the United
23822382 States for treatment of wounds, injuries or
23832383 disease,
23842384 the time for filing a return and paying an income tax
23852385 shall be and is hereby extended without incurring
23862386 liability for interest or penalties, to the f ifteenth
23872387 day of the third month following the month in which:
23882388 (a) Such individual shall return to the United
23892389 States if the extension is granted pursuant
23902390 to subparagraph a of this paragraph, return
23912391 to the State of Oklahoma if the extension is
23922392 granted pursuant to subparagraph b of this
23932393 paragraph or be discharged from such
23942394 hospital if the extension is granted
23952395 pursuant to subparagraph c of this
23962396 paragraph, or
23972397 (b) An executor, administrator, or conservator
23982398 of the estate of the taxpayer is appointed,
23992399 whichever event occurs the earliest.
24002400 Provided, that the Tax Commission may, in its discreti on, grant
24012401 any member of the Armed Forces of the United States an extension of
24022402 time for filing of income tax returns and payment of income tax
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24292429 without incurring liabilities for in terest or penalties. Such
24302430 extension may be granted only when in the judgment of the Tax
24312431 Commission a good cause exists therefor and may be for a period in
24322432 excess of six (6) months. A record of every such extension granted,
24332433 and the reason therefor, shall be kept.
24342434 6. Before July 1, 2010, the salary or any other form of
24352435 compensation, received from the United States by a member of any
24362436 component of the Armed Forces of the United States, shall be
24372437 deducted from taxable income during the time in which the person is
24382438 detained by the enemy in a conflict, is a prisoner of war or is
24392439 missing in action and not deceased; provided, after July 1, 2010,
24402440 all such salary or compensation shall be subject to the deduction as
24412441 provided pursuant to paragraph 5 of this subsection.
24422442 7. a. An individual taxpayer, whether resident or
24432443 nonresident, may deduct an a mount equal to the federal
24442444 income taxes paid by the taxpayer during the taxable
24452445 year.
24462446 b. Federal taxes as described in subparagraph a of this
24472447 paragraph shall be deductible by any individual
24482448 taxpayer, whether resident or nonresident, only to the
24492449 extent they relate to income subject to taxation
24502450 pursuant to the provisions of the Oklahoma Income Tax
24512451 Act. The maximum amount allowable in the preceding
24522452 paragraph shall be prorated on the ratio of the
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24792479 Oklahoma adjusted gross income to federal adjusted
24802480 gross income.
24812481 c. For the purpose of this paragraph, "federal income
24822482 taxes paid" shall mean federal income taxes, surtaxes
24832483 imposed on incomes or excess profits taxes, as though
24842484 the taxpayer was on the accrual basis. In determining
24852485 the amount of deduction for federal income taxes for
24862486 tax year 2001, the amount of the deduction shall not
24872487 be adjusted by the amount of any accelerated ten
24882488 percent (10%) tax rate bracket credit or advanced
24892489 refund of the credit received during the tax year
24902490 provided pursuant to the federal Econom ic Growth and
24912491 Tax Relief Reconciliation Act of 2001, P.L. No. 107 -
24922492 16, and the advanced refund of such credit shall not
24932493 be subject to taxation.
24942494 d. The provisions of this paragraph shall apply to all
24952495 taxable years ending after December 31, 1978, and
24962496 beginning before January 1, 2006.
24972497 8. Retirement benefits not to exceed Five Thousand Five Hundred
24982498 Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five
24992499 Hundred Dollars ($7,500. 00) for the 2005 tax year and Ten Thousand
25002500 Dollars ($10,000.00) for the 2006 t ax year and all subsequent tax
25012501 years, which are received by an individual from the civil service of
25022502 the United States, the Oklahoma Public Employees Retirement System,
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25292529 the Teachers' Retirement System of Oklahoma, the Oklahoma Law
25302530 Enforcement Retirement System, the Oklahoma Firefighters Pension and
25312531 Retirement System, the Oklahoma Police Pension and Retirement
25322532 System, the employee retirement systems created by counties pursuant
25332533 to Section 951 et seq. of Title 19 of the Oklahoma Statutes, the
25342534 Uniform Retirement System for Justices and Judges, the Oklahoma
25352535 Wildlife Conservation Department Retirement Fund, the Oklahoma
25362536 Employment Security Commission Retirement Plan, or the employee
25372537 retirement systems created by municipalities pursuant to Section 48 -
25382538 101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt
25392539 from taxable income.
25402540 9. In taxable years beginning after December 3l, 1984, Social
25412541 Security benefits received by an individual shall be exempt from
25422542 taxable income, to the extent such benefits are included in the
25432543 federal adjusted gross income pursuant to the provisions of Section
25442544 86 of the Internal Revenue Code, 26 U.S.C., Section 86.
25452545 10. For taxable years beginning after Decembe r 31, 1994, lump-
25462546 sum distributions from employer plans of deferred compensation,
25472547 which are not qualified plans within the meaning of Section 401(a)
25482548 of the Internal Revenue Code, 26 U.S.C., Section 401(a), and which
25492549 are deposited in and accounted for within a separate bank account or
25502550 brokerage account in a financial institution withi n this state,
25512551 shall be excluded from taxable income in the same manner as a
25522552 qualifying rollover contribution to an individual retirement account
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25792579 within the meaning of Section 408 of the Internal Revenue Code, 26
25802580 U.S.C., Section 408. Amounts withdrawn from such bank or brokerage
25812581 account, including any earnings thereon, shall be included in
25822582 taxable income when withdrawn in the same manner as withdrawals from
25832583 individual retirement a ccounts within the meaning of Section 408 of
25842584 the Internal Revenue Code.
25852585 11. In taxable years beginning after December 31, 1995,
25862586 contributions made to and interest received from a medical savings
25872587 account established pursuant to Sections 2621 through 2623 o f Title
25882588 63 of the Oklahoma Statutes shall be exempt from taxable income.
25892589 12. For taxable years beginning after December 31, 1996, the
25902590 Oklahoma adjusted gross income of any individual taxpayer who is a
25912591 swine or poultry producer may be further adjusted for the deduction
25922592 for depreciation allowed for new construction or expansion costs
25932593 which may be computed using the same depreciation method elected for
25942594 federal income tax purposes except that the useful life shall be
25952595 seven (7) years for purposes of this paragr aph. If depreciation is
25962596 allowed as a deduction in determining the adjusted gross income of
25972597 an individual, any depreciation calculated and claimed pursuant to
25982598 this section shall in no event be a duplication of any depreciation
25992599 allowed or permitted on the f ederal income tax return of the
26002600 individual.
26012601 13. a. In taxable years beginning before January 1, 2005,
26022602 retirement benefits not to exceed the amounts
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26292629 specified in this paragraph, which are received by an
26302630 individual sixty-five (65) years of age or older and
26312631 whose Oklahoma adjusted gross income is Twenty -five
26322632 Thousand Dollars ($25,000.00) or less if the filing
26332633 status is single, head of household, or married filing
26342634 separate, or Fifty Thousand Dollars ($50,000.00) or
26352635 less if the filing status is married filing jo int or
26362636 qualifying widow, shall be exempt from taxable income.
26372637 In taxable years beginning after December 31, 2004,
26382638 retirement benefits not to exceed the amounts
26392639 specified in this paragraph, which are received by an
26402640 individual whose Oklahoma adjusted gross income is
26412641 less than the qualifying amount specified in this
26422642 paragraph, shall be exempt from taxable income.
26432643 b. For purposes of this paragraph, the qualifying amount
26442644 shall be as follows:
26452645 (1) in taxable years beginning after December 31,
26462646 2004, and prior to J anuary 1, 2007, the
26472647 qualifying amount shall be Thirty -seven Thousand
26482648 Five Hundred Dollars ($37,500.00) or less if the
26492649 filing status is single, head of household, or
26502650 married filing separate, or Seventy -five Thousand
26512651 Dollars ($75,000.00) or less if the filin g status
26522652 is married filing jointly or qualifying widow,
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26792679 (2) in the taxable year beginning January 1, 2007,
26802680 the qualifying amount shall be Fifty Thousand
26812681 Dollars ($50,000.00) or less if the filing status
26822682 is single, head of household, or married filing
26832683 separate, or One Hundred Thousand Dollars
26842684 ($100,000.00) or less if the filing statu s is
26852685 married filing jointly or qualifying widow,
26862686 (3) in the taxable year beginning January 1, 2008,
26872687 the qualifying amount shall be Sixty -two Thousand
26882688 Five Hundred Dollars ($62,50 0.00) or less if the
26892689 filing status is single, head of household, or
26902690 married filing separate, or One Hundred Twenty -
26912691 five Thousand Dollars ($125,000.00) or less if
26922692 the filing status is married filing jointly or
26932693 qualifying widow,
26942694 (4) in the taxable year begin ning January 1, 2009,
26952695 the qualifying amount shall be One Hundred
26962696 Thousand Dollars ($100,000.00) or less if the
26972697 filing status is single, head of household, or
26982698 married filing separate, or Two Hundred Thousand
26992699 Dollars ($200,000.00) or less if the filing
27002700 status is married filing jointly or qualifying
27012701 widow, and
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27282728 (5) in the taxable year beginning January 1, 2010,
27292729 and subsequent taxable years, there shall be no
27302730 limitation upon the qualifying amount.
27312731 c. For purposes of this paragraph, "retirement benefits"
27322732 means the total distributions or withdrawals from the
27332733 following:
27342734 (1) an employee pension benefit plan which satisfies
27352735 the requirements of Section 401 of the Internal
27362736 Revenue Code, 26 U.S.C., Section 401,
27372737 (2) an eligible deferred compensation plan that
27382738 satisfies the requirements of Section 457 of the
27392739 Internal Revenue Code, 26 U.S.C., Section 457,
27402740 (3) an individual retirement account, annuity or
27412741 trust or simplified employee pension that
27422742 satisfies the requirements of Section 408 of the
27432743 Internal Revenue Code, 26 U.S.C. , Section 408,
27442744 (4) an employee annuity subject to the provisions of
27452745 Section 403(a) or (b) of the Internal Revenue
27462746 Code, 26 U.S.C., Section 403(a) or (b),
27472747 (5) United States Retirement Bonds which satisfy the
27482748 requirements of Section 86 of the Internal
27492749 Revenue Code, 26 U.S.C., Section 86, or
27502750 (6) lump-sum distributions from a retirement plan
27512751 which satisfies the requirements of Section
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27782778 402(e) of the Internal Revenue Code, 26 U.S.C.,
27792779 Section 402(e).
27802780 d. The amount of the exemption provided by this paragraph
27812781 shall be limited to Five Thousand Five Hundred Dollars
27822782 ($5,500.00) for the 2004 tax year, Seven Thousand Five
27832783 Hundred Dollars ($7,500.00) for the 2005 tax year and
27842784 Ten Thousand Dollars ($10,000.00) for the tax year
27852785 2006 and for all subsequent tax years. Any ind ividual
27862786 who claims the exemption provided for in paragraph 8
27872787 of this subsection shall not be permitted to claim a
27882788 combined total exemption pursuant to this paragraph
27892789 and paragraph 8 of this subsection in an amount
27902790 exceeding Five Thousand Five Hundred Dolla rs
27912791 ($5,500.00) for the 2004 tax year, Seven Thousand Five
27922792 Hundred Dollars ($7, 500.00) for the 2005 tax year and
27932793 Ten Thousand Dollars ($10,000.00) for the 2006 tax
27942794 year and all subsequent tax years.
27952795 14. In taxable years beginning after December 31, 1999, f or an
27962796 individual engaged in production agriculture who has filed a
27972797 Schedule F form with the taxpayer 's federal income tax return for
27982798 such taxable year, there shall be excluded from taxable income any
27992799 amount which was included as federal taxable income or f ederal
28002800 adjusted gross income and which consists of the discharge of an
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28272827 obligation by a creditor of the taxpayer incurred to finance the
28282828 production of agricultural products.
28292829 15. In taxable years beginning December 31, 2000, an amount
28302830 equal to one hundred p ercent (100%) of the amount of any scholarship
28312831 or stipend received from participation in the Oklahoma Police Corps
28322832 Program, as established in Section 2 -140.3 of Title 47 of the
28332833 Oklahoma Statutes shall be exempt from taxable income.
28342834 16. a. In taxable years beginning after December 31, 2001,
28352835 and before January 1, 2005, there shall be allowed a
28362836 deduction in the amount of contributions to accounts
28372837 established pursuant to the Oklahoma College Savings
28382838 Plan Act. The deduction shall equal the amount of
28392839 contributions to accounts, but in no event shall the
28402840 deduction for each contributor exceed Two Thousand
28412841 Five Hundred Dollars ($2,500.00) each taxable year for
28422842 each account.
28432843 b. In taxable years beginning after December 31, 2004,
28442844 each taxpayer shall be allowed a deduct ion for
28452845 contributions to accounts established pursuant to the
28462846 Oklahoma College Savings Plan Act. The maximum annual
28472847 deduction shall equal the amount of contributions to
28482848 all such accounts plus any contributions to such
28492849 accounts by the taxpayer for prior ta xable years after
28502850 December 31, 2004, which were not deducted, but in no
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28772877 event shall the deduction for each tax year exceed Ten
28782878 Thousand Dollars ($10,000.00) for each individual
28792879 taxpayer or Twenty Thousand Dollars ($20,000.00) for
28802880 taxpayers filing a joint r eturn. Any amount of a
28812881 contribution that is not deducted by the taxpayer in
28822882 the year for which the contribution is made may be
28832883 carried forward as a deduction from income for the
28842884 succeeding five (5) years. For taxable years
28852885 beginning after December 31, 20 05, deductions may be
28862886 taken for contributions and rollovers made during a
28872887 taxable year and up to April 15 of the succeeding
28882888 year, or the due date of a taxpayer 's state income tax
28892889 return, excluding extensions, whichever is later.
28902890 Provided, a deduction for the same contribution may
28912891 not be taken for two (2) different taxable years.
28922892 c. In taxable years beginning after December 31, 2006,
28932893 deductions for contributions made pursuant to
28942894 subparagraph b of this paragraph shall be limited as
28952895 follows:
28962896 (1) for a taxpayer who qualified for the five -year
28972897 carryforward election and who takes a rollover or
28982898 nonqualified withdrawal during that period, the
28992899 tax deduction otherwise available pursuant to
29002900 subparagraph b of this paragraph shall be reduced
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29272927 by the amount which is equal to the rollover or
29282928 nonqualified withdrawal, and
29292929 (2) for a taxpayer who elects to take a rollover or
29302930 nonqualified withdrawal within the same tax year
29312931 in which a contribution was made to the
29322932 taxpayer's account, the tax deduction otherwise
29332933 available pursuant to subparagraph b of this
29342934 paragraph shall be reduced by the amount of the
29352935 contribution which is equal to the rollover or
29362936 nonqualified withdrawal.
29372937 d. If a taxpayer elects to take a rollover on a
29382938 contribution for which a deduction has been taken
29392939 pursuant to subparagraph b of this paragraph within
29402940 one (1) year of the date of contribut ion, the amount
29412941 of such rollover shall be included in the adjusted
29422942 gross income of the taxpayer in the taxable year of
29432943 the rollover.
29442944 e. If a taxpayer makes a nonqualified withdra wal of
29452945 contributions for which a deduction was taken pursuant
29462946 to subparagraph b of this paragraph, such nonqualified
29472947 withdrawal and any earnings thereon shall be included
29482948 in the adjusted gross income of the taxpayer in the
29492949 taxable year of the nonqualified withdrawal.
29502950 f. As used in this paragraph:
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29772977 (1) "non-qualified withdrawal " means a withdrawal
29782978 from an Oklahoma College Savings Plan account
29792979 other than one of the following:
29802980 (a) a qualified withdrawal,
29812981 (b) a withdrawal made as a result of the death
29822982 or disability of the designated beneficiary
29832983 of an account,
29842984 (c) a withdrawal that is made on the account of
29852985 a scholarship or the allowance or payment
29862986 described in Section 135(d)(1)(B) or (C) or
29872987 by the Internal Revenue Code, received by
29882988 the designated beneficiary to t he extent the
29892989 amount of the refund does not exceed the
29902990 amount of the scholarsh ip, allowance, or
29912991 payment, or
29922992 (d) a rollover or change of designated
29932993 beneficiary as permitted by subsection F of
29942994 Section 3970.7 of Title 70 of Oklahoma
29952995 Statutes, and
29962996 (2) "rollover" means the transfer of funds from the
29972997 Oklahoma College Savings Plan to any other plan
29982998 under Section 529 of the Internal Revenue Code.
29992999 17. For tax years 2006 through 2021, retirement benefits
30003000 received by an individual from any component of the Armed Forc es of
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30273027 the United States in an amount not to exceed the greater of seventy -
30283028 five percent (75%) of such benefits or Ten Thousand Dollars
30293029 ($10,000.00) shall be exempt from taxable income but in no case less
30303030 than the amount of the exemption provided by paragrap h 13 of this
30313031 subsection. For tax year 2022 and subsequent tax years, retirement
30323032 benefits received by an individual from any component of the Armed
30333033 Forces of the United States shall be exempt from taxable income.
30343034 18. For taxable years beginning after Dece mber 31, 2006,
30353035 retirement benefits received by federal civil service retirees,
30363036 including survivor annuities, paid in lieu of Social Security
30373037 benefits shall be exempt from taxable income to the extent such
30383038 benefits are included in the federal adjusted gross income pursuant
30393039 to the provisions of Section 86 of the Internal Revenue Code, 26
30403040 U.S.C., Section 86, according to the following schedule:
30413041 a. in the taxable year beginning January 1, 2007, twenty
30423042 percent (20%) of such benefits shall be exempt,
30433043 b. in the taxable year beginning January 1, 2008, forty
30443044 percent (40%) of such benefits sha ll be exempt,
30453045 c. in the taxable year beginning January 1, 2009, sixty
30463046 percent (60%) of such benefits shall be exempt,
30473047 d. in the taxable year beginning January 1, 2010, eighty
30483048 percent (80%) of such benefits shall be exempt, and
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30753075 e. in the taxable year beginning January 1, 2011, and
30763076 subsequent taxable years, one hundred percent (100%)
30773077 of such benefits shall be exempt.
30783078 19. a. For taxable years beginning after December 31, 2007, a
30793079 resident individual may deduct up to Ten Thousand
30803080 Dollars ($10,000.00) from Oklaho ma adjusted gross
30813081 income if the individual, or the dependent of the
30823082 individual, while living, donates one or more human
30833083 organs of the individual to another human being for
30843084 human organ transplantation. As used in this
30853085 paragraph, "human organ" means all or part of a liver,
30863086 pancreas, kidney, intestine, lung, or bone marrow. A
30873087 deduction that is claimed under this paragraph may be
30883088 claimed in the taxable year in which the human organ
30893089 transplantation occurs.
30903090 b. An individual may claim this deduction only once, a nd
30913091 the deduction may be claimed only for unreimbursed
30923092 expenses that are incurred by the individual and
30933093 related to the organ donation of the individual.
30943094 c. The Oklahoma Tax Commis sion shall promulgate rules to
30953095 implement the provisions of this paragraph which shall
30963096 contain a specific list of expenses which may be
30973097 presumed to qualify for the deduction. The Tax
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31243124 Commission shall prescribe necessary requirements for
31253125 verification.
31263126 20. For taxable years beginning after December 31, 2009, there
31273127 shall be exempt from taxable income any amount received by the
31283128 beneficiary of the death benefit for an emergency medical technician
31293129 or a registered emergency medical responder provided by Section 1 -
31303130 2505.1 of Title 63 of the Oklahoma Statutes.
31313131 21. For taxable years beginning after December 31, 2008,
31323132 taxable income shall be increased by any unemployment compensation
31333133 exempted under Section 85(c) of the Internal Revenue Code, 26
31343134 U.S.C., Section 85(c)(2 009).
31353135 22. For taxable years beginning after December 31, 2008, there
31363136 shall be exempt from taxable income any payment in an amount less
31373137 than Six Hundred Dollars ($600.00) received by a person as an award
31383138 for participation in a competitive livestock show ev ent. For
31393139 purposes of this paragraph, the payment shall be treated as a
31403140 scholarship amount paid by the entity sponsoring the event and the
31413141 sponsoring entity shall cause the payment to be categorized as a
31423142 scholarship in its books and records.
31433143 23. For taxable years beginning on or after January 1, 2016,
31443144 taxable income shall be increa sed by any amount of state and local
31453145 sales or income taxes deducted under 26 U.S.C., Section 164 of the
31463146 Internal Revenue Code. If the amount of state and local taxes
31473147 deducted on the federal return is limited, taxable income on the
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31743174 state return shall be increased only by the amount actually deducted
31753175 after any such limitations are applied.
31763176 24. For taxable years beginning after December 31, 2020, each
31773177 taxpayer shall be allowed a de duction for contributions to accounts
31783178 established pursuant to the Achieving a Better Life Experience
31793179 (ABLE) Program as established in Section 4001.1 et seq. of Title 56
31803180 of the Oklahoma Statutes. For any tax year, the deduction provided
31813181 for in this paragraph shall not exceed Ten Thousand Dollars
31823182 ($10,000.00) for an individual taxpayer or Twenty Thousand Dollars
31833183 ($20,000.00) for taxpayers filing a joint return. Any amount of
31843184 contribution not deducted by the taxpayer in the tax year for which
31853185 the contribution is made may be carried forward as a deduction from
31863186 income for up to five (5) tax years. Deductions may be taken for
31873187 contributions made during the tax year and through April 15 of the
31883188 succeeding tax year, or through the due date of a taxpayer 's state
31893189 income tax return excluding extensions, whichever is later.
31903190 Provided, a deduction for the same contribution may not be taken in
31913191 more than one (1) tax year.
31923192 F. 1. For taxable years beginning after December 31, 2004, a
31933193 deduction from the Oklahoma adjusted gr oss income of any individual
31943194 taxpayer shall be allowed for qualifying gains re ceiving capital
31953195 treatment that are included in the federal adjusted gross income of
31963196 such individual taxpayer during the taxable year.
31973197 2. As used in this subsection:
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32243224 a. "qualifying gains receiving capital treatment " means
32253225 the amount of net capital gains, as defined in Section
32263226 1222(11) of the Internal Revenue Code, included in an
32273227 individual taxpayer's federal income tax return that
32283228 result from:
32293229 (1) the sale of real property or tang ible personal
32303230 property located within Oklahoma that has been
32313231 directly or indirectly owned by the individual
32323232 taxpayer for a holding period of at least five
32333233 (5) years prior to the date of the transaction
32343234 from which such net capital gains arise,
32353235 (2) the sale of stock or the sale of a direct or
32363236 indirect ownership interest in an Oklahoma
32373237 company, limited liability company, or
32383238 partnership where such stock or ownership
32393239 interest has been directly or indirectly owned by
32403240 the individual taxpayer for a holding period o f
32413241 at least two (2) years prior to the date of the
32423242 transaction from which the n et capital gains
32433243 arise, or
32443244 (3) the sale of real property, tangible personal
32453245 property or intangible personal property located
32463246 within Oklahoma as part of the sale of all or
32473247 substantially all of the assets of an Oklahoma
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32743274 company, limited liability company, or
32753275 partnership or an Oklahoma proprietorship
32763276 business enterprise where such property has been
32773277 directly or indirectly owned by such entity or
32783278 business enterprise or owned by the own ers of
32793279 such entity or business enterprise for a period
32803280 of at least two (2) yea rs prior to the date of
32813281 the transaction from which the net capital gains
32823282 arise,
32833283 b. "holding period" means an uninterrupted period of
32843284 time. The holding period shall include any a dditional
32853285 period when the property was held by another
32863286 individual or entity, if such additional period is
32873287 included in the taxpayer 's holding period for the
32883288 asset pursuant to the Internal Revenue Code,
32893289 c. "Oklahoma company," "limited liability company, " or
32903290 "partnership" means an entity whose primary
32913291 headquarters have been located in Oklahoma for at
32923292 least three (3) uninterrupted years prior to the date
32933293 of the transaction from which the net capital gains
32943294 arise,
32953295 d. "direct" means the individual taxpayer directl y owns
32963296 the asset,
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33233323 e. "indirect" means the individual taxpayer owns an
33243324 interest in a pass-through entity (or chain of pass -
33253325 through entities) that sells the asset that gives rise
33263326 to the qualifying gains receiving capital treatment.
33273327 (1) With respect to sales of real property or
33283328 tangible personal property located within
33293329 Oklahoma, the deduction described in this
33303330 subsection shall not apply unless the pass -
33313331 through entity that makes the sale has held the
33323332 property for not less than five (5) uninterrupted
33333333 years prior to the date of the transaction that
33343334 created the capital gain, and each pass -through
33353335 entity included in the chain of ownership has
33363336 been a member, partner, or shareholder of the
33373337 pass-through entity in the tier immediately below
33383338 it for an uninterrupted perio d of not less than
33393339 five (5) years.
33403340 (2) With respect to sales of stock or owner ship
33413341 interest in or sales of all or substantially all
33423342 of the assets of an Oklahoma company, limited
33433343 liability company, partnership or Oklahoma
33443344 proprietorship business enterprise, the deduction
33453345 described in this subsection shall not apply
33463346 unless the pass-through entity that makes the
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33733373 sale has held the stock or ownership interest for
33743374 not less than two (2) uninterrupted years prior
33753375 to the date of the transaction that created the
33763376 capital gain, and each pass -through entity
33773377 included in the chain of ownership has been a
33783378 member, partner or shareholder of the pass -
33793379 through entity in the tier immediately below it
33803380 for an uninterrupted period of not less than two
33813381 (2) years. For purposes of thi s division,
33823382 uninterrupted ownership prior to July 1, 2007,
33833383 shall be included in the determination of the
33843384 required holding period prescribed by this
33853385 division, and
33863386 f. "Oklahoma proprietorship business enterprise " means a
33873387 business enterprise whose income and expenses have
33883388 been reported on Schedule C or F of an individual
33893389 taxpayer's federal income tax return, or any similar
33903390 successor schedule published by the Internal Revenue
33913391 Service and whose primary headquarters have been
33923392 located in Oklahoma for at least thre e (3)
33933393 uninterrupted years prior to the date of the
33943394 transaction from which the net capital gains arise.
33953395 G. 1. For purposes of computing its Oklahoma taxable income
33963396 under this section, the dividends -paid deduction otherwise allowed
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34233423 by federal law in comput ing net income of a real estate investment
34243424 trust that is subject to federal in come tax shall be added back in
34253425 computing the tax imposed by this state under this title if the real
34263426 estate investment trust is a captive real estate investment trust.
34273427 2. For purposes of computing its Oklahoma taxable income under
34283428 this section, a taxpayer shall add back otherwise deductible rents
34293429 and interest expenses paid to a captive real estate investment trust
34303430 that is not subject to the provisions of paragraph 1 of this
34313431 subsection. As used in this subsection:
34323432 a. the term "real estate investment trust " or "REIT"
34333433 means the meaning ascribed to such term in Section 856
34343434 of the Internal Revenue Code,
34353435 b. the term "captive real estate investment trust " means
34363436 a real estate investment trust, the shares or
34373437 beneficial interests of which are not regularly traded
34383438 on an established securities market and more than
34393439 fifty percent (50%) of the voting power or value of
34403440 the beneficial interests or shares of which are owned
34413441 or controlled, directly or indirectly, or
34423442 constructively, by a single entity that is:
34433443 (1) treated as an association taxable as a
34443444 corporation under the Internal Revenue Code, and
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34713471 (2) not exempt from federal income tax pursuant to
34723472 the provisions of Section 501(a) of the Internal
34733473 Revenue Code.
34743474 The term shall not include a real estate investment
34753475 trust that is intended to be regularly traded on an
34763476 established securities market, and that satisfies the
34773477 requirements of Section 856(a)(5) and (6) of the U.S.
34783478 Internal Revenue Code by reason of Section 856(h)(2)
34793479 of the Internal Revenue Code,
34803480 c. the term "association taxable as a corporation " shall
34813481 not include the following entities:
34823482 (1) any real estate investment trust as defined in
34833483 paragraph a of this subsection other than a
34843484 "captive real estate investment trust ",
34853485 (2) any qualified real estate investment trust
34863486 subsidiary under Section 856(i) of the Internal
34873487 Revenue Code, other than a qualified REIT
34883488 subsidiary of a "captive real estate investment
34893489 trust",
34903490 (3) any Listed Australian Property Trust (meaning an
34913491 Australian unit trust registered as a "Managed
34923492 Investment Scheme" under the Australian
34933493 Corporations Act in which the principal class of
34943494 units is listed on a recognized stock exchange in
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35213521 Australia and is regularly traded on an
35223522 established securities market), or an entity
35233523 organized as a trust, provided that a Listed
35243524 Australian Property Trust owns or controls,
35253525 directly or indirectly, seventy -five percent
35263526 (75%) or more of the voting power or value of the
35273527 beneficial interests or shares of such trust , or
35283528 (4) any Qualified Foreign Entity, meaning a
35293529 corporation, trust, associati on or partnership
35303530 organized outside the laws of the United States
35313531 and which satisfies the following criteria:
35323532 (a) at least seventy-five percent (75%) of the
35333533 entity's total asset value at the close of
35343534 its taxable year is represented by real
35353535 estate assets, as defined in Section
35363536 856(c)(5)(B) of the Internal Revenue Code,
35373537 thereby including shares or certificates of
35383538 beneficial interest in any real estate
35393539 investment trust, cash and cash equivalents,
35403540 and U.S. Government securities,
35413541 (b) the entity receives a divide nd-paid
35423542 deduction comparable to Section 561 of the
35433543 Internal Revenue Code, or is exempt from
35443544 entity level tax,
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35713571 (c) the entity is required to distribute at
35723572 least eighty-five percent (85%) of its
35733573 taxable income, as computed in the
35743574 jurisdiction in which it is organized, to
35753575 the holders of its shares or certificates of
35763576 beneficial interest on an annual basis,
35773577 (d) not more than ten percent (10%) of the
35783578 voting power or value in such entity is held
35793579 directly or indirectly or constructively by
35803580 a single entity or indivi dual, or the shares
35813581 or beneficial interests of such entity are
35823582 regularly traded on an established
35833583 securities market, and
35843584 (e) the entity is organized in a country which
35853585 has a tax treaty with the United States.
35863586 3. For purposes of this subsection, the constructive ownership
35873587 rules of Section 318(a) of the Internal Revenue Code, as modified by
35883588 Section 856(d)(5) of the Internal Revenue Code, shall apply in
35893589 determining the ownership of stock, assets, or net profits of any
35903590 person.
35913591 4. A real estate investment trus t that does not become
35923592 regularly traded on an established securities market within one (1)
35933593 year of the date on which it first becomes a real estate investment
35943594 trust shall be deemed not to have been regularly traded on an
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36213621 established securities market, retroactive to the date it first
36223622 became a real estate investment trust, and shall file an amended
36233623 return reflecting such retroactive designation for any tax year or
36243624 part year occurring during its initial year of status as a real
36253625 estate investment trust. For p urposes of this subsection, a real
36263626 estate investment trust becomes a real estate investment trust on
36273627 the first day it has both met the requirements of Section 856 of the
36283628 Internal Revenue Code and has elected to be treated as a real estate
36293629 investment trust pursuant to Section 856(c)(1) of the Internal
36303630 Revenue Code.
36313631 SECTION 3. This act shall become effective January 1, 2026.
36323632
36333633 60-1-10214 MAH 01/13/25