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STATE OF OKLAHOMA
1st Session of the 60th Legislature (2025)
SENATE BILL 1098 By: Thompson
AS INTRODUCED
An Act relating to taxation; amending 68 O.S. 2021,
Sections 2802, 2803, and 2817, as amended by Section
1, Chapter 374, O.S.L. 2022 ( 68 O.S. Supp. 2024,
Section 2817), which relate to the Ad Valorem Tax
Code; defining terms; expanding classifications of
property for purposes of ad valorem taxation;
modifying the valuation procedure of certain real
property for assessment; updating statutory
references; updating statutory language; and
providing an effective date .
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 2802, is
amended to read as follows:
Section 2802. As used in Section 2801 et seq. of this title:
1. “Accepted standards for mass appraisal practice ” means those
standards for the collection and analysis of information about
taxable properties within a taxing jurisdiction permitting the
accurate estimate of fair cash value for similar properties in the
jurisdiction either without direct observation of such similar
properties or without direct sales price information for such
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similar properties using a reliable statistical or other method to
estimate the values of such properties;
2. “Additional homestead exemption ” means the exemption
provided by Section 2890 of this title;
3. “Assessor” means the county assessor and, unless the context
clearly requires otherwise, deputy assessors and persons e mployed by
the county assessor in performance of duties imposed by law;
4. “Assess and value” means to establish the fair cash value
and taxable fair cash value of taxable real and personal property
pursuant to requirements of law;
5. “Assessed valuation” or “assessed value” means the
percentage of the fair cash value of personal property, or the
percentage of the taxable fair cash value of real property, pursuant
to the provisions of Sections 8 and 8B of Article X of the Oklahoma
Constitution, either of individual items of personal property,
parcels of real property or the aggregat e total of such individual
taxable items or parcels within a jurisdiction;
6. “Assessment percentage ” means the percentage applied to
personal property and real property pursua nt to Section 8 of Article
X of the Oklahoma Constitution;
7. “Assessment ratio” means the relationship between assessed
value and taxable fair cash value for a county or for use categories
within a county expressed as a percentage determined in the annua l
equalization ratio study;
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8. “Assessment roll” means a computerized or nonco mputerized
record required by law to be kept by the county assessor and
containing information about property within a taxing jurisdiction;
9. “Assessment year” means the year beginning January 1 of each
calendar year and ending on December 31 preceding the following
January 1 assessment date;
10. “Circuit breaker” means the form of property tax relief
provided by Sections 2904 through 2911 of this title;
11. “Class of subjects” means a category of property
specifically designated pursuant to provisions of the Oklahoma
Constitution for purposes of ad valorem taxation;
12. “Code” means the Ad Valorem Tax Code, Section 2801 et seq.
of this title;
13. “Coefficient of dispersion ” means a statistical measure of
assessment uniformity for a category of property or for all property
within a taxing jurisdiction;
14. “Confidence level” means a statistical procedure for
determining the degree of reliability for use in reporting the
assessment ratio for a taxing jurisdiction;
15. “Cost approach” means a method used to establish the fair
cash value of property involving an estimate of current construction
cost of improvements, subtracting accrued depreciation including any
loss in value that may be caused by physical deterioration,
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functional obsolescence or economic obsolescence and adding the
value of the land.
a. Physical deterioration is a cause of depreciation that
is a loss in value due to ordinary wear and tear and
the forces of nature.
b. Functional or internal obsolescence is the loss in
value of a property resulting from changes in tastes,
preferences, technical innovations or market
standards.
c. Economic or external obsolescence is a cause of
depreciation that is a loss in value as a result of
impairment in utility and desirability caused by
factors outside the boundaries of the property or loss
of value in a property (relative to the cost of
replacing it with a property of equal utility) that
stems from factors external to the p roperty;
16. “County board of equalization ” means the board which, upon
hearing competent evidence, has the authority to correct and adjust
the assessment rolls in its respective county to conform to fair
cash value and such other responsibilities as pres cribed in Section
2801 et seq. of this title;
17. “Equalization” means the process for making adjustments to
taxable property values within a county by analyzing the
relationships between assessed values and fair cash values in one or
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more use categories within the county or between counties by
analyzing the relationship between ass essed value and fair cash
value in each county;
18. “Equalization ratio study ” means the analysis of the
relationships between assessed values and fair cash values in the
manner provided by law;
19. “Fair cash value” or “market value” means the value or
price at which a willing buyer would purchase property and a willing
seller would sell property if both parties are knowledgeable about
the property and its uses and if neither party is under any undue
pressure to buy or sell and for real property shall me an the value
for the highest and best use for which such property was actually
used, or was previously classified for use, during the calendar year
next preceding the applicable January 1 assessment date;
20. “Homestead exemption” means the reduction in the taxable
value of a homestead as authorized by law;
21. “Income and expense approach ” means a method to estimate
fair cash value of a property by determining the present valu e of
the projected income stream;
22. “List and assess” means the process by w hich taxable
property is discovered, its description recorded for purposes of ad
valorem taxation and its fair cash value and taxable fair cash value
are established;
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23. “Mill” or “millage” means the rate of tax imposed upon
taxable value. One (1) mill equals One Dollar ($1.00) of tax for
each One Thousand Dollars ($1,000.00) of taxable value;
24. “Multiple regression analysis ” means a statistical
technique for estimating unk nown data on the basis of known and
available data;
25. “Parcel” means a contiguous area of land described in a
single description by a deed or other instrument or as one of a
number of lots on a plat or plan, separately owned and capable of
being separately conveyed;
26. “Residential rental housing ” means any single tax parcel
that contains a building or buildings that are constructed and used
for multifamily housing or contains two or more single family homes
that are constructed for rental purposes. For the purposes of this
paragraph, “multifamily housing” shall mean residential buildings or
complexes that contain multiple separate units or dwellings intended
for occupancy by multiple families or households;
27. “Sales comparison approach ” means the collection,
verification, and screening of sales data, stratification of sales
information for purposes of comparison and use of such information
to establish the fair cash value of taxable property;
27. 28. “State Board of Equalization ” means the Board
responsible for valuation of railroad, airline and public service
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corporation property and the adjustment and equalization of all
property values both centrally and locally assessed;
28. 29. “Taxable value” means the percentage of the fair cash
value of personal property or the taxable fair cash value of real
property, less applicable exemptions, upon which an ad valorem tax
rate is levied pursuant to the provisions of Section 8 and Section
8B of Article X of the Oklahoma Constitution;
29. 30. “Taxable fair cash value” means the fair cash value of
locally assessed real property as cap ped pursuant to Section 8B of
Article X of the Oklahoma Constitution;
30. 31. “Use category” means a subcategory of real property ,
that is either agricultural use, residential use or
commercial/industrial use but does not and shall not constitute a
class of subjects within the meaning of the Oklahoma Constitution
for purposes of ad valorem taxation;
31. 32. “Use value” means the basis for establishing fair cash
value of real property pursuant to the requirement of Section 8 of
Article X of the Oklahoma Co nstitution; and
32. 33. “Visual inspection program ” means the program required
in order to gather data about real property from physical
examination of the property and improve ments in order to establish
the fair cash values of properties so inspected at least once each
four (4) years and the fair cash values of similar properties on an
annual basis.
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SECTION 2. AMENDATORY 68 O.S. 2021, Section 2803, is
amended to read as follows:
Section 2803. A. The Legislature, pursuant to aut hority of
Article X, Section 22 of Article X of the Oklahoma Constitution,
hereby classifies the following types of property for purposes of ad
valorem taxation:
1. Real property, except as provided by paragraph 6 of this
subsection;
2. Personal property, except as provided in paragraph 3 of this
subsection;
3. Personal property which is household goods of the head of
families and livestock employed in support of the family in those
counties which have exempted such property pursuant to subsection
(b) B of Section 6 of Article X of the Oklahoma Constitution;
4. Public service corporation property; and
5. Railroad and air carrier property ; and
6. Real property containing impr ovements constructed for the
purposes of providing residential rental housing .
B. Valuation of each class of subjects shall be made by a
method appropriate for each class or any subclass thereof, as
established by the Ad Valorem Division of the Oklahoma T ax
Commission.
C. Classification as provided by this section shall require
uniform treatment of each item within a class or any subclass as
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provided in Article X, Section 5 of Article X of the Oklahoma
Constitution.
SECTION 3. AMENDATORY 68 O.S. 2021, Section 2817, as
amended by Section 1, Chapter 374, O.S.L. 2022 (68 O.S. Supp. 2024,
Section 2817), is amended to read as follows:
Section 2817. A. All taxable personal property, except
intangible personal property, personal proper ty exempt from ad
valorem taxation, or household personal property, shall be li sted
and assessed each year at its fair cash value, estimated at the
price it would bring at a fair voluntary sale, as of January 1.
The fair cash value of household personal pr operty shall be
valued at ten percent (10%) of the appraised value of the
improvement to the residential real property within which such
personal property is located as of January 1 each year. The
assessment of household personal property as provided by t his
section may be altered by the taxpayer listing such property at its
actual fair cash value. For purposes of establishing the value of
household personal property, pursuant to the requirement of Section
8 of Article X of the Oklahoma Constitution, the percentage of value
prescribed by this section for the household personal property shall
be presumed to constitute the fair cash value of the personal
property.
Stocks of goods, wares, and merchandise shall be assessed at the
value of the average amount on hand during the preceding year, or
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the average amount on hand during the part of the preceding year the
stock of goods, wares, or merchandise was at its January 1 location.
Provided, persons primarily engaged in selling lumber and other
building materials including cement and concrete, except for home
centers classified under Industry No. 444110 of the North American
Industrial Classification Systems (NAICS) Manual, shall be assessed
at the average value of the inventory on hand as of January 1 of
each year and the value of the inventory on hand as of December 31
of the same year.
B. All taxable real property shall be assessed annually as of
January 1, at its fair cash value, estimated at the price it would
bring at a fair voluntary sale for:
1. The highest and best use for which the property was actually
used during the preceding calendar year; or
2. The highest and best use for which the property was last
classified for use if not actually used during the preceding
calendar year.
When improvements upon residential real property are divided by
a taxing jurisdiction line, those imp rovements shall be valued and
assessed in the taxing jurisdiction in which the physical majority
of those improvements are located.
The Ad Valorem Division of the Oklahoma Tax C ommission shall be
responsible for the promulgation of rules which shall be followed by
each county assessor of the state, for the purposes of providing for
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the equitable use valuation of locally assessed real property in
this state. Agricultural land and nonresidential improvements
necessary or convenient for agricultural purposes shall be assessed
for ad valorem taxation based upon the highest and best use for
which the property was actually used, or was previously classified
for use, during the calendar year next preceding January 1 on which
the assessment is made.
C. The use value of agricultural land shall be based on the
income capitalization approach using cash rent. The rental income
shall be calculated using the direct capitalization method based
upon factors including, but not limited to:
1. Soil types, as depicted on soi l maps published by the
Natural Resources Conservation Service of the United States
Department of Agriculture;
2. Soil productivity indices approved by the Ad Valorem
Division of the Tax Commission;
3. The specific agricultural purpose of the soil based on use
categories approved by the Ad Valorem Division of the Tax
Commission; and
4. A capitalization rate to be determined annually by the Ad
Valorem Division of the Tax Commis sion based on the sum of the
average first mortgage interest rate charged by th e Federal Land
Bank for the immediately preceding five (5) years, weighted with the
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prevailing rate or rates for additional loans or equity, and the
effective tax rate.
The final use value will be calculated using the soil
productivity indices and the agricultural use classification as
defined by rules promulgated by the State Board of Equalization.
This subsection shall not be construed in a manner which is
inconsistent with th e duties, powers, and authority of the Board as
to valuation of the counties as fixed and defined by Section 21 of
Article X of the Oklahoma Constitution.
However, in calculating the use value of buffer strips as
defined in Section 2817.2 of this title, ex clusive consideration
shall be based only on income from production agriculture from such
buffer strips, not including federal or state subsidies, when valued
as required by subsection C of Section 2817.2 of this title.
D. The use value of nonresidential improvements on agricultural
land shall be based on the cost approach to value estimation using
currently updated cost manuals published by the Marshall and Swift
Company or similar cost manuals approved by the Ad Valorem Division
of the Tax Commission. T he use value estimates for the
nonresidential improvements shall take obsolescence and depreciation
into consideration in addition to necessary adjustments for local
variations in the cost of labor and materials. This section shall
not be construed in a m anner which is inconsistent with the duties,
powers, and authority of the Board as to equalization of valuation
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of the counties as determined and defined by Section 21 of Article X
of the Oklahoma Constitution.
The use value of facilities used for poultry production shall be
determined according to the following procedures:
1. The Ad Valorem Division of the Tax Commission is hereby
directed to develop a standard system of valuation of both real and
personal property of such facilities, which shall be used by all
county assessors in this state, under which valuation based on the
following shall be presumed to be the fair cash value of the
property:
a. for real property, a ten -year depreciation schedule,
at the end of which the residual value is twenty
percent (20%) of the value of the facility during its
first year of operation, and
b. for personal property, a five -year depreciation
schedule, at the end of which the residual value is
zero;
2. Such facilities shall be valued only in comparison to other
facilities used exclusively for poultry production. Such a facility
which is no longer used for poultry production shall be deemed to
have no productive use;
3. During the first year such a facility is placed on the tax
rolls, its fair cash value shall be pres umed to be the lesser of the
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actual purchase price or the actual documented cost of construction;
and
4. For the purpose of determining the valuation of
nonresidential improvements used for poultry production, the
provisions of this subsection shall be ap plicable and such
improvements shall not be considered to be commercial propert y.
E. The value of investment in property used exclusively by an
oil refinery that is used wholly as a facility, device, or method
for the desulphurization of gasoline or diese l fuel as defined in
Section 2817.3 of this title shall not be included in the
capitalization used in the determination of fair market value of
such oil refinery if such property would qualify as exempt property
pursuant to Section 2902 of this title, whet her or not an
application for such exemption is made by an otherwise qualifying
manufacturing concern owning the property described by Section
2817.3 of this title.
F. The use value of a lot in any platted addition or a
subdivision in a city, town, or cou nty zoned for residential,
commercial, industrial, or other use shall be deemed to be the fair
cash value of the underlying tract of land platted, divided by the
number of lots contained in the platted addition or subdivision
until the lot shall have been conveyed to a bona fide purchaser or
the lot with building or buildings located thereon shall have been
occupied other than as a sales office by the owner thereof, or shall
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have been leased, whichever event shall first occur. One who
purchases a lot for t he purposes of constructing and selling a
building on such lot shall not be deemed to be a bona fide purchaser
for purposes of this section. However, if the lot is held for a
period longer than two (2) years before construction, then the
assessor may consider the lot to have been conveyed to a bona fide
purchaser. The cost of any l and or improvements to any real
property required to be dedicated to public use including, but not
limited to, streets, curbs, gutters, sidewalks, storm or sanitary
sewers, utilities, detention or retention ponds, easements, parks,
or reserves shall not be utilized by the county assessor in the
valuation of any real property for assessment purposes.
G. The transfer of real property without a change in its use
classification shall not require a reassessment thereof based
exclusively upon the sale value of t he property. However, if the
county assessor determines:
1. That by reason of the transfer of a property there is a
change in the actual use or classification of the property; or
2. That by reason of the amount of the sales consideration it
is obvious that the use classification prior to the transfer of the
property is not commensurate with and would not justify the amount
of the sales consideration of the property;
then the assessor shall, in either event, reassess the property for
the new use classific ation for which the property is being used, or ,
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the highest and best use classification for which the property may,
by reason of the transfer, be classified for use.
H. When the term “fair cash value” or the language “fair cash
value, estimated at the price it would bring at a fair voluntary
sale” is used in the Ad Valorem Tax Code, in connection with and in
relation to the assessment of real property, it is defined to mean
and shall be given the meaning ascribed and assigned to it in this
section and when the term or language is used in the Code in
connection with the assessment of personal property , it shall be
given its ordinary or literal meaning.
I. Where any real property is zoned for a use by a proper
zoning authority, and the use of the property has not been changed,
the use and not zoning shall determine assessment. Any reassessment
required shall be effective January 1 following the change in use.
Taxable real propert y need not be listed annually with the county
assessor.
J. If any real propert y shall become taxable after January 1 of
any year, the county assessor shall assess the same and place it
upon the tax rolls for the next ensuing year. When any building is
constructed upon land after January 1 of any year, the value of the
building shall be added by the county assessor to the assessed
valuation of the land upon which the building is constructed at the
fair cash value thereof for the next ensuing year. However , after
the building has been completed it shall be deemed to have a value
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for assessment purposes of the fair cash value of the materials used
in such building only, until the building and the land on which the
building is located shall have been conveyed to a bona fide
purchaser or shall have been occupied or used for any purpose other
than as a sales office by the owner thereof, or shall have been
leased, whichever event shall first occur. The county assessor
shall continue to assess the building based upon the fair market
value of the materials used therein until the building and land upon
which the building is located shall have been conveyed to a bona
fide purchaser or is occupied or used for any purpose other than as
a sales office by the owner there of, or is leased, whichever event
shall first occur. In the event a building or buildings described
by this subsection are intended to serve primarily as residential
rental housing, after the building or buildings have been completed
they shall be deemed to have an initial value for assessment
purposes not to exceed the fair cash va lue of the land and the
actual documented cost of any improvements made to the building or
buildings. The county assessor shall continue to assess such
building or buildings at a value not to exceed the fair cash value
of the land and actual documented cost of any improvements made
until either two (2) years have passed since the date on which the
building or buildings were first reflected on the tax rolls, or the
building or buildings and the land on which the building or
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buildings are located shall have been conveyed to a bona fide
purchaser, whichever event shall first occur.
K. In the event improvements on land or personal property
located therein or thereon are destroyed or partially destroyed, or
the land itself is impaired or partially impaired by fire,
lightning, storm, winds, floodwaters, overflow of streams, or other
cause (all such destruction or impairments being referred to herein
as “damage”) during any year, the co unty assessor shall determine
the amount of damage and shall reassess the prope rty for that year
at the fair cash value of the property, taking into account the
actual loss of functional use of the property occasioned by such
damage. The assessor shall ma ke the appropriate value adjustments
to the property for that tax year up to the time at which the
assessor publishes the “Assessor’s assessor’s Report to the Excise
Board” Board as required by subsection D of Section 2867 of this
title. After such time, adjustments can be made only by the county
board of tax roll corrections and on ly after the assessor has
certified the tax roll for that year. The board secretary shall
notify property owners in advance of the time and place at which the
value adjustment to their property will be heard by the board. The
board of tax roll corrections is authorized only to approve or
reject the value adjustment submitted by the county assessor.
L. All taxable personal property used in the exploration of
oil, natural gas, or other minerals including drilling equipment and
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rigs, shall be assessed annua lly at the value set forth in the first
Hadco International monthly bulletin published for the tax year,
using the appropriate depth rating assigned to the drawworks by its
manufacturer and the actual condition of the rig.
M. The value of taxable tangible personal property used in
commercial disposal systems of waste materials from the production
of oil and gas shall not include any contract rights or leases for
the use of such systems nor any value associated with the wellbore
or non-recoverable down-hole material including casing.
SECTION 4. This act shall become effective November 1, 2025.
60-1-387 QD 1/16/2025 3:32:31 PM