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HOUSE OF REPRESENTATIVES - FLOOR VERSION
STATE OF OKLAHOMA
1st Session of the 60th Legislature (2025)
HOUSE BILL 1864 By: Roberts of the House
and
Hines of the Senate
AS INTRODUCED
[ revenue and taxation - sales tax exemptions -
tangible personal property – veterans - nonvehicle
and vehicle purchases - effective date ]
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 1357, as
last amended by Section 4, Chapter 36 3, O.S.L. 2024 (68 O.S. Supp.
2024, Section 1357), is amended to read as follows:
Section 1357. Exemptio ns – General.
There are hereby specifically exempted from the tax levied by
the Oklahoma Sales Tax Code:
1. Transportation of school pupils to and fro m elementary
schools or high schools in motor or other vehicles;
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2. Transportation of persons where the fare of each person does
not exceed One Dollar ($1.00), or local transportatio n of persons
within the corporate limits of a municipality except by taxi cabs;
3. Sales for resale to persons engaged in the business of
reselling the articles purchased, whethe r within or without the
state, provided that such sales to residents of this state are made
to persons to whom sales tax permits have been issued as pr ovided in
the Oklahoma Sales Tax Code. This exemption shall not apply to the
sales of articles made to p ersons holding permits when such persons
purchase items for their use and whic h they are not regularly
engaged in the business of reselling; neither sh all this exemption
apply to sales of tangible personal property to peddlers, solicitors
and other salespersons who do not have an established place of
business and a sales tax permit. The exemption provided by this
paragraph shall apply to sales of motor fuel or diesel fuel to a
Group Five vendor, but the use of such motor fuel or diesel fuel by
the Group Five vendor shall not be exempt from the tax levied by the
Oklahoma Sales Tax Co de. The purchase of motor fuel or diesel fuel
is exempt from sales tax w hen the motor fuel is for shipment outside
this state and consumed by a common carrier by rail in the con duct
of its business. The sales tax shall apply to the purchase of motor
fuel or diesel fuel in Oklahoma by a common carrier by rail when
such motor fuel is purchased for fueling, within this state, of any
locomotive or other motorized flanged wheel equip ment;
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4. Sales of advertising space in newspapers and periodicals;
5. Sales of programs relating to sporting and entertainment
events, and sales of a dvertising on billboards (including signage,
posters, panels, marquees or on other similar surfaces, whet her
indoors or outdoors) or in programs relating to sporting and
entertainment events, and sales of any advertising, to be displayed
at or in connection with a sporting event, via the Internet,
electronic display devices or through public address or broadc ast
systems. The exemption authorized by this paragraph shall be
effective for all sales made on or after January 1, 2001;
6. Sales of any advertisin g, other than the advertising
described by paragraph 5 of this section, via the Internet,
electronic display devices or through the electronic media including
radio, public address or broadcast systems, television (whether
through closed circuit broadcasti ng systems or otherwise), and cable
and satellite television, and the servicing of any advertising
devices;
7. Eggs, feed, supplies, machinery, and equipment purchased by
persons regularly engaged in the business of raising worms, fish,
any insect, or any other form of terrestrial or aquatic animal life
and used for the purpose of raising same for marketing. This
exemption shall only be granted and extended to the purchaser when
the items are to be used and in fact are used in the raising of
animal life as set out above. Each purchaser shall certify, in
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writing, on the invoice or sales ticket retained by th e vendor that
the purchaser is regularly engaged in the business of raising su ch
animal life and that the items purchased will be used only in such
business. The vendor shall certify to the Oklahoma Tax Commission
that the price of the items has been redu ced to grant the full
benefit of the exemption. Violation hereof by the purchaser or
vendor shall be a misdemeanor;
8. Sale of natural or artificial gas and electricity, and
associated delivery or transmission services, when sold exclusively
for residential use. Provided, this exemption shall not apply to
any sales tax levied by a city or town, or a county or any other
jurisdiction in this state;
9. In addition to the exemptions authorized by Section 1357.6
of this title, sales of drugs sold pursuant to a prescription
written for the treatment of human beings by a person licensed to
prescribe the drugs, and sales of insulin and medical oxygen.
Provided, this exemption shall not apply to over -the-counter drugs;
10. Transfers of title or possession of em pty, partially
filled, or filled returnable oil and chemical drums to any pers on
who is not regularly engaged in the business of selling, reselling
or otherwise transferring empty, partially filled or filled
returnable oil drums;
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11. Sales of one-way utensils, paper napkins, paper cups,
disposable hot containers, and other one -way carry out materials to
a vendor of meals or beverages;
12. Sales of food or food products for home consumption which
are purchased in whole or in part with coupons issued pursua nt to
the federal food stamp program as authorized by Sections 2011
through 2029 of Title 7 of the United States Code, as to that
portion purchased wit h such coupons. The exemption provided for
such sales shall be inapplicable to such sales upon the effec tive
date of any federal law that removes the requirement of the
exemption as a condition for participation by the state in the
federal food stamp prog ram;
13. Sales of food or food products, or any equipment or
supplies used in the preparation of the foo d or food products to or
by an organization which:
a. is exempt from taxation pursuant to the provisions of
Section 501(c)(3) of the Internal Revenue C ode, 26
U.S.C., Section 501(c)(3), and which provides and
delivers prepared meals for home consumption to
elderly or homebound persons as part of a program
commonly known as "Meals on Wheels" or "Mobile Meals",
or
b. is exempt from taxation pursuant to the provisions of
Section 501(c)(3) of the Internal Revenue Code, 26
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U.S.C., Section 501(c)(3), and which re ceives federal
funding pursuant to the Older Americans Act of 1965,
as amended, for the purpose of providing nutrition
programs for the care and benefi t of elderly persons;
14. a. Sales of tangible personal property or services to or
by organizations which are exempt from taxation
pursuant to the provisions of Section 501(c)(3) of the
Internal Revenue Code, 26 U.S.C., Section 501(c)(3),
and:
(1) are primarily involved in the collection and
distribution of food and other household products
to other organizations that facilitate the
distribution of such products to the needy and
such distributee organizations are exempt from
taxation pursuant to the provisi ons of Section
501(c)(3) of the Internal Revenue Code, 26
U.S.C., Section 501(c)(3), or
(2) facilitate the distribution of such products to
the needy.
b. Sales made in the course of business for profit or
savings, competing with other persons engaged in th e
same or similar business shall not be exempt under
this paragraph;
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15. Sales of tangible personal prop erty or services to
children's homes which are located on church -owned property and are
operated by organizations exempt from taxation pursuant to the
provisions of the Internal Revenue Code, 26 U.S.C., Section
501(c)(3);
16. Sales of computers, data proc essing equipment, related
peripherals, and telephone, telegraph or telecommunications service
and equipment for use in a qualified aircraft maintenance or
manufacturing facility. For purposes of this paragraph, "qualified
aircraft maintenance or manufactu ring facility" means a new or
expanding facility primarily engaged in aircraft repair, building or
rebuilding whether or not on a factory basis, whose total cost of
construction exceeds the sum of Five Million Dollars ($5,000,000.00)
and which employs at l east two hundred fifty (250) new full -time-
equivalent employees, as certified by the Oklahoma Employment
Security Commission, upon completion of the fa cility. In order to
qualify for the exemption provided for by this paragraph, the cost
of the items purchased by the qualified aircraft maintenance or
manufacturing facility shall eq ual or exceed the sum of Two Million
Dollars ($2,000,000.00);
17. Sales of tangible personal property consumed or
incorporated in the construction or expansion of a qualified
aircraft maintenance or manufacturing facility as defined in
paragraph 16 of this section. For purposes of this paragraph, sales
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made to a contractor or subcontractor that has previously entered
into a contractual relationship with a qualified aircraft
maintenance or manufacturing facility for construction or expansion
of such a facility shall be considered sales made to a qualified
aircraft maintenance o r manufacturing facility;
18. Sales of the following telecommunications services:
a. Interstate and International "800 service". "800
service" means a telecommunications service that
allows a caller to dial a toll -free number without
incurring a charge f or the call. The service is
typically marketed under the name "800", "855", "866",
"877" and "888" toll-free calling, and any subsequent
numbers designated by the Federal Communicati ons
Commission,
b. Interstate and International "900 service". "900
service" means an inbound toll telecommunications
service purchased by a subscriber that allows the
subscriber's customers to call in to the subscriber 's
prerecorded announcement or live service. 900 service
does not include the charge for: collection servic es
provided by the seller of the telecommunications
services to the subscriber, or service or product sol d
by the subscriber to the subscriber 's customer. The
service is typically ma rketed under the name "900"
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service, and any subsequent numbers designate d by the
Federal Communications Commission,
c. Interstate and International "private communications
service". "Private communications service " means a
telecommunications service that entitles the customer
to exclusive or priority use of a communications
channel or group of channels between or among
termination points, regardless of the manner in which
such channel or channels are connected, and includes
switching capacity, extension l ines, stations and any
other associated services that are provided in
connection with the use of such channel or channels,
d. "Value-added nonvoice data service ". "Value-added
nonvoice data service " means a service that otherwise
meets the definition of telecommunications services in
which computer processing applications are used to act
on the form, content, code or protocol of the
information or data primarily for a purpose oth er than
transmission, conveyance, or routing,
e. Interstate and International telecommunications
service which is:
(1) rendered by a company for privat e use within its
organization, or
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(2) used, allocated or distributed by a company to
its affiliated group ,
f. Regulatory assessments and charges including charges
to fund the Oklahoma Universal Service Fund, the
Oklahoma Lifeline Fund and the Oklahoma High Cost
Fund, and
g. Telecommunications nonrecurring charges including but
not limited to the installation, connection, change,
or initiation of telecommunications services which are
not associated with a retail consumer sale;
19. Sales of railroad track sp ikes manufactured and sold for
use in this state in the construction or repair of railroad tracks,
switches, sidings, and turnouts;
20. Sales of aircraft and aircraft parts provided such sales
occur at a qualified aircraft maintenance facility. As used i n this
paragraph, "qualified aircraft maintenance facility " means a
facility operated by an air common ca rrier including one or more
component overhaul support buildings or structures in an area owned,
leased, or controlled by the air common carrier, at wh ich there were
employed at least two thousand (2,000) full -time-equivalent
employees in the preceding yea r as certified by the Oklahoma
Employment Security Commission and which is primarily related to the
fabrication, repair, alteration, modification, refu rbishing,
maintenance, building, or rebuilding of commercial aircraft or
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aircraft parts used in air commo n carriage. For purposes of this
paragraph, "air common carrier" shall also include members of an
affiliated group as defined by Section 1504 of the I nternal Revenue
Code, 26 U.S.C., Section 1504. Beginning July 1, 2012, sales of
machinery, tools, suppli es, equipment, and related tangible personal
property and services used or consumed in the repair, remodeling, or
maintenance of aircraft, aircraft eng ines or aircraft component
parts which occur at a qualified aircraft maintenance facility;
21. Sales of machinery and equipment purchased and used by
persons and establishments prima rily engaged in computer services
and data processing:
a. as defined under Industry Group Numbers 7372 and 7373
of the Standard Industrial Classification (SIC)
Manual, latest version, which derive at least fifty
percent (50%) of their annual gross revenues from the
sale of a product or service to an out -of-state buyer
or consumer, and
b. as defined under Industry Group Number 7374 of the SIC
Manual, latest version, which derive at least eighty
percent (80%) of their annual gross revenues from the
sale of a product or service to an out -of-state buyer
or consumer.
Eligibility for the exemption set out in this paragraph shall be
established, subject to review by the Tax Commission, by annually
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filing an affidavit with the Tax Commission stating that the
facility so qualifies and such information as required by the Tax
Commission. For purposes of determining whether annual gross
revenues are derived from sales to out -of-state buyers or consumers,
all sales to the federal government shall be considered to be to a n
out-of-state buyer or consumer;
22. Sales of prosthetic devices to an individual for use by
such individual. For purposes of this paragraph, "prosthetic
device" shall have the same meaning as provided in Section 1357.6 of
this title, but shall not include corrective eye glasses, contact
lenses, or hearing aids;
23. Sales of tangible personal property or services to a motion
picture or television production company to be used or consumed in
connection with an eligible production. For purposes of this
paragraph, "eligible production" means a documentary, special, music
video or a television commercial or television program that will
serve as a pilot for or be a segment of an on going dramatic or
situation comedy series filmed or taped for network or national or
regional syndication or a feature -length motion picture intended f or
theatrical release or for network or national or regional
syndication or broadcast. The provisions of this paragraph shall
apply to sales occurring on or after July 1, 1996. In o rder to
qualify for the exemption, the motion picture or television
production company shall file any documentation and information
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required to be submitted pursuant to rules pro mulgated by the Tax
Commission;
24. Sales of diesel fuel sold for consumption by commercial
vessels, barges and other commercial watercraft;
25. Sales of tangible personal property or services to tax -
exempt independent nonprofit biomedical research found ations that
provide educational programs for Oklahoma science students and
teachers and to tax-exempt independent nonprofit community blood
banks headquartered in this state;
26. Effective May 6, 1992, sales of wireless telecommunications
equipment to a vendor who subsequently transfers the equipment at no
charge or for a discounted charge to a consumer as part of a
promotional package or as an induceme nt to commence or continue a
contract for wireless telecommunications services;
27. Effective January 1, 1991, leases of rail transportation
cars to haul coal to coal -fired plants located in this state which
generate electric power;
28. Beginning July 1, 2005, sales of aircraft engine repairs,
modification, and replacement parts, sales of aircraft frame rep airs
and modification, aircraft interior modification, and paint, and
sales of services employed in the repair, modification, and
replacement of parts of aircraft engines, aircraft frame and
interior repair and modification, and paint;
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29. Sales of materi als and supplies to the owner or operator of
a ship, motor vessel, or barge th at is used in interstate or
international commerce if the materials and s upplies:
a. are loaded on the ship, motor vessel, or barge and
used in the maintenance and operation of t he ship,
motor vessel, or barge, or
b. enter into and become component parts of the ship,
motor vessel, or barge;
30. Sales of tangible personal prope rty made at estate sales at
which such property is offered for sale on the premises of the
former residence of the decedent by a person who is not required to
be licensed pursuant to the Transient Merchant Licensing Act, or who
is not otherwise required to obtain a sales tax permit for the sale
of such property pursuant to the provisions of Section 1364 of th is
title; provided:
a. such sale or event may not be held for a period
exceeding three (3) consecutive days,
b. the sale must be conducted within six ( 6) months of
the date of death of the decedent, and
c. the exemption allowed by this paragraph shall not be
allowed for property that was not part of the
decedent's estate;
31. Beginning January 1, 2004, sales of electricity and
associated delivery and tr ansmission services, when sold exclusively
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for use by an oil and gas operator for reservoir dewatering pr ojects
and associated operations commencing on or after July 1, 2003, in
which the initial water -to-oil ratio is greater than or equal to
five-to-one water-to-oil, and such oil and gas development projects
have been classified by the Corporation Commission as a reservoir
dewatering unit;
32. Sales of prewritten computer software th at is delivered
electronically. For purposes of this paragraph, "delivered
electronically" means delivered to the purchaser by means other than
tangible storage media;
33. Sales of modular dwelling units when built at a production
facility and moved in whole or in parts, to be assembled on -site,
and permanently affixed to the real property and used for
residential or commercial purposes. The exemption provided by this
paragraph shall equal forty-five percent (45%) of the total sales
price of the modular dwelling unit. For purposes of this paragraph,
"modular dwelling unit " means a structure that is not subject to the
motor vehicle excise tax imposed pursuant to Section 2103 of this
title;
34. Sales of tangible personal property or services to:
a. persons who are residents of Oklahoma and have been
honorably discharged from a ctive service in any branch
of the Armed Forces of the United States or Oklahoma
National Guard and who h ave been certified by the
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United States Department of Veterans Affairs or its
successor to be in receipt of disability compensation
at the one-hundred-percent rate and the disability
shall be permanent and have been sustained through
military action or acc ident or resulting from disease
contracted while in such active service and registered
with the veterans registry created by the Oklahoma
Department of Veterans Affairs, or
b. the surviving spouse of the person in subparagraph a
of this paragraph if the pe rson is deceased and the
spouse has not remarried and the surviving spouse of a
person who is determined by the United States
Department of Defense or any branch of the United
States military to have died while in the line of duty
if the spouse has not rem arried. Sales for the
benefit of an eligible person to a spouse of the
eligible person or to a member of the household in
which the eligible person re sides and who is
authorized to make purchases on the person 's behalf,
when such eligible person is not pr esent at the sale,
shall also be exempt for purposes of this paragraph.
The Oklahoma Tax Commission shall issue a separate
exemption card to a spouse of an eligible person or to
a member of the household in which the eligible person
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resides who is authori zed to make purchases on the
person's behalf, if requested by the eligible person.
Sales qualifying for the exemption authorized by this
paragraph shall not exceed Twenty -five Thousand
Dollars ($25,000.00) for nonvehicle purchases per year
per individual while the disabled veteran is living.
Sales qualifying for the exemption auth orized by this
paragraph shall not exceed Twenty Thousand Dollars
($20,000.00) for a vehicle purchase per individual
while the disabled veteran is living, as long as the
exemption has not been used for a vehicle in the
preceding five (5) years. Sales qualifying for the
exemption authorized by this paragraph shall not
exceed One Thousand Dollars ($1,000.00) per year for
an unremarried surviving spouse. Upon request of the
Tax Commission, a person asserting or claiming the
exemption authorized by this parag raph shall provide a
statement, executed under oath, that the total sales
amounts for which the exemption is applicable have not
exceeded Twenty-five Thousand Dollars ($25,000.00 ) per
year per living disabled veteran or One Thousand
Dollars ($1,000.00) per year for an unremarried
surviving spouse. If the amount of such exempt sales
exceeds such amount, the sales tax in excess of the
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authorized amount shall be treated as a direct sales
tax liability and may be recovered by the Tax
Commission in the same man ner provided by law for
other taxes including penalty and interest. The Tax
Commission shall promulgate any rules necessary to
implement the provisions of this paragraph, which
shall include rules providing for the disclosure of
information about persons eligible for the exemption
authorized in this paragraph to the Oklahoma
Department of Veterans Affairs, as authorized in
Section 205 of this title. For purposes of the
exemption authorized by this subparagraph, if the
disability determination that would h ave been made
while the disabled veteran was still living is not
made final until after the death of the disabled
veteran, the exemption authorized by this subparagraph
may still be claimed by the surviving spouse;
35. Sales of electricity to the operator, specifically
designated by the Corporation Commission, of a spacing uni t or lease
from which oil is produced or attempted to be produced using
enhanced recovery methods includi ng, but not limited to, increased
pressure in a producing formation through th e use of water or
saltwater if the electrical usage is associated with an d necessary
for the operation of equipment required to inject or circulate
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fluids in a producing formatio n for the purpose of forcing oil or
petroleum into a wellbore for eventual recovery and production from
the wellhead. In order to be eligible for the sales tax exemption
authorized by this paragraph, the total content of oil recovered
after the use of enh anced recovery methods shall not exceed one
percent (1%) by volume. The exemp tion authorized by this paragraph
shall be applicable only to the state s ales tax rate and shall not
be applicable to any county or municipal sales tax rate;
36. Sales of intras tate charter and tour bus transportation.
As used in this paragraph, "intrastate charter and tour bus
transportation" means the transportation of pers ons from one
location in this state to another location in this state in a motor
vehicle which has been c onstructed in such a manner that it may
lawfully carry more than eighteen pers ons, and which is ordinarily
used or rented to carry persons for compensa tion. Provided, this
exemption shall not apply to regularly scheduled bus transportation
for the general public;
37. Sales of vitamins, minerals, and dietary supplements by a
licensed chiropractor to a person who is the patient of such
chiropractor at the physical location where the chiropractor
provides chiropractic care or services to such patient. The
provisions of this paragraph shall not be applicable to any drug,
medicine, or substance for which a prescription by a licensed
physician is required;
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38. Sales of goods, wares, merchandise, tangible personal
property, machinery, and equipment to a web sea rch portal located in
this state which derives at least eighty percent (80%) of its annual
gross revenue from the sale of a product or service to an ou t-of-
state buyer or consumer. For purposes of this paragraph, "web
search portal" means an establishment classified under NAICS code
519130 which operates websites that use a search engine to generate
and maintain extensive databases of Internet addresses and content
in an easily searchable format;
39. Sales of tangible personal property consumed or
incorporated in the construction or expansion of a facility for a
corporation organized under Section 437 et seq. of Title 18 of the
Oklahoma Statutes as a ru ral electric cooperative. For purposes of
this paragraph, sales made to a contractor or subcontractor th at has
previously entered into a contractual relationship with a rural
electric cooperative for construction or expansion of a facility
shall be considered sales made to a rural electric cooperative;
40. Sales of tangible personal property or services to a
business primarily engaged in the repair of consumer electronic
goods including, but not limited to, cell phones, compact disc
players, personal comp uters, MP3 players, digital devices for the
storage and retrieval of information through hard -wired or wireless
computer or Internet connections, if the devices are sold to the
business by the original manufacturer of such devices and the
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devices are repaired, refitted or refurbished for sale by the entity
qualifying for the exemption authorized by this parag raph directly
to retail consumers or if the devices are sold to another business
entity for sale to retail consumers;
41. On or after July 1, 2019, an d prior to July 1, 2024, sales
or leases of rolling stock when sold or leased by the manufacturer,
regardless of whether the purchaser is a public services corporation
engaged in business as a common carrier of property or passengers by
railway, for use or consumption by a common carrier directly in the
rendition of public service. For purposes of this parag raph,
"rolling stock" means locomotives, autocars, and railroad cars and
"sales or leases" includes railroad car maintenance and retrofitting
of railroad cars for their further use only on the railways;
42. Sales of gold, silver, platinum, palladium or ot her bullion
items such as coins and bars and legal tender of any nation, which
legal tender is sold according to its value as precious metal or as
an investment. As used in the paragraph, "bullion" means any
precious metal including, but not limited to, g old, silver,
platinum, and palladium, that is in such a state or condition that
its value depends upon its precious metal content and not its form.
The exemption authorized by this paragraph shall not apply to
fabricated metals that have been processed or manufactured for
artistic use or as jewelry; and
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43. Recovery fees on the re ntal charge from any item of heavy
equipment property rental as provided for in Section 2 of this act.
SECTION 2. This act shall become effective November 1, 202 5.
COMMITTEE REPORT BY: COMMITTEE ON APPROPRIATIONS AND BUDGET, dated
03/05/2025 - DO PASS, As Amended and Coauthored.