OK
Oklahoma Senate Bill SB227

Oklahoma 2025 Regular Session

Oklahoma Senate Bill SB227 Compare Versions

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5353 STATE OF OKLAHOMA
5454
5555 1st Session of the 60th Legislature (2025)
5656
5757 SENATE BILL 227 By: Daniels
5858
5959
6060
6161
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6363 AS INTRODUCED
6464
6565 An Act relating to taxation; stating intent; amending
6666 68 O.S. 2021, Section 1001.3a, as amended by Section
6767 9, Chapter 346, O.S.L. 2022 ( 68 O.S. Supp. 2024,
6868 Section 1001.3a), which relates to exemptions from
6969 gross production tax; limiting exemption to certain
7070 years; amending 68 O.S. 2021, Section 2355, as last
7171 amended by Section 1, Chapter 27, 1st Extraordinary
7272 Session, O.S.L. 2023 (68 O.S. Supp. 2024, Section
7373 2355), which relates to income tax; modifying certain
7474 income tax rate for certain tax years; modifying
7575 certain withholding requirement for certain tax
7676 years; amending 68 O.S. 2021, Section 2357.4, which
7777 relates to tax credit for invest ments; limiting
7878 credit to certain tax years; 68 O.S. 2021, Section
7979 2357.43, which relates to the Oklahoma earned income
8080 tax credit; limiting refundability of credit to
8181 certain tax years; amending 68 O.S. 2021, Section
8282 2358, as last amended by Section 155, Chapter 452,
8383 O.S.L. 2024 (68 O.S. Supp. 2024, Section 2358), which
8484 relates to adjustments; modifying amount of deduction
8585 for qualifying gains receiving capital treatment for
8686 certain tax years; modifying standard deduction
8787 amount for certain tax years; amending 68 O.S. 2021,
8888 Section 5011, which relates to the Sales Tax Relief
8989 Act; limiting claims to certain years; updating
9090 statutory references; updating statutory language;
9191 clarifying statutory language; providing for
9292 noncodificaton; providing an effective da te; and
9393 declaring an emergency .
9494
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9999 BE IT ENACTED BY THE PEOPLE OF TH E STATE OF OKLAHOMA:
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151151 SECTION 1. NEW LAW A new section of law not to be
152152 codified in the Oklahoma Statutes reads as follows:
153153 It is the intent of the Legisla ture that the following
154154 limitations and modifications to tax credits and deductions in this
155155 act serve to mitigate the short-term decrease in collections caused
156156 by reducing the burden on the taxpayers of this state.
157157 SECTION 2. AMENDATORY 68 O.S. 2021, Section 1001.3a, as
158158 amended by Section 9, Chapter 346, O. S.L. 2022 (68 O.S. Supp. 2024,
159159 Section 1001.3a), is amended to read as follows:
160160 Section 1001.3a. A. As used in this section:
161161 1. Prior to January 1, 2015, “economically at-risk oil or gas
162162 lease” means any oil or gas lease operated at a net loss or at a net
163163 profit which is less than the total gross production tax remitted
164164 for such lease during the previous calendar year;
165165 2. On or after January 1, 2015, and before January 1, 2022 ,
166166 “economically at-risk oil or gas lease ” means any oil or gas lease
167167 with one or more producing wells with an average production volume
168168 per well of ten (10) barrels of oil or sixty (60) MCF of natural gas
169169 per day or less operated at a net loss or at a net profit which is
170170 less than the total gross production tax remitted for such lease
171171 during the previous calendar year;
172172 3. For calendar year 2022 and subsequent calendar years 2022
173173 through 2024, “economically at-risk oil or gas lease ” means any oil
174174 or gas lease with one or more producing wells with an average
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226226 production volume per well of ten (10) barrels of oil or sixty (60)
227227 MCF or less of natural gas per day operated at a net loss or at a
228228 net profit which is less than the total gross production tax
229229 remitted for such lease during the previous calendar year, and any
230230 oil lease operating while the gross value of the production of oil
231231 is less than Fifty Dollars ($50.00), on an average monthly basis,
232232 based on a per-barrel measurement of forty -two (42) U.S. gallons of
233233 two hundred thirty-one (231) cubic inches per gallon, computed at a
234234 temperature of sixty (60) degrees Fahrenheit or gas lease operating
235235 while the gross value of the production of gas is less than Three
236236 Dollars and fifty cents ($3.50), on an average mont hly basis, based
237237 on a measurement of one million (1,000,000) British thermal units
238238 (MMBtu); and
239239 4. “Lease” shall be defined as in Section 1001.2 of this title.
240240 B. When certified as such pursuant to the provisions of this
241241 section, production from an econo mically at-risk oil or gas lease
242242 shall be eligible for an exemption from the g ross production tax
243243 levied pursuant to subsection B of Section 1001 of this title for
244244 production on such lease during the previous calendar year in the
245245 following amounts:
246246 1. If the gross production tax rate levied pursuant to
247247 subsection B of Section 1001 of this title was seven percent (7%),
248248 then the exemption shall equal six -sevenths (6/7) of the gross
249249 production tax levied; and
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301301 2. If the gross production tax rate levied pursua nt to
302302 subsection B of Section 1001 of this title was five percent (5%),
303303 then the exemption shall equal four -fifths (4/5) of the gross
304304 production tax levied.
305305 C. For all production exempt from gross production taxes
306306 pursuant to this section, a refund of gro ss production taxes paid
307307 for production in the previous calendar year in the amounts
308308 specified in subsection B of this section, subject to the
309309 limitations and provisions specified in subsections D and J of this
310310 section, shall be issued to the well operator or a designee. For
311311 production in calendar years ending on or before December 31, 2015,
312312 the refund shall not be claimed until after July 1 of the year
313313 following the year of production. For production in the calendar
314314 year ending December 31, 2016, the ref und shall be claimed before
315315 July 1, 2017. For production in the calendar year 2024, the refund
316316 shall be claimed on or before the effective date of this act . The
317317 Oklahoma Tax Commission shall not accept or pay any claim for refund
318318 filed after the effective date of this act.
319319 D. For oil and natural gas produced from qualifying lease s in
320320 calendar years 2015 and 2016, the total amount of refunds authorized
321321 in this section for each calendar year shall not exceed Twelve
322322 Million Five Hundred Thousand Dollars ($1 2,500,000.00) for all
323323 products combined. For oil and natural gas produced from qualifying
324324 leases in calendar year 2022 and subsequent calendar years 2022
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376376 through 2024, the total amount of refunds authorized in this section
377377 for each calendar year shall not exceed Ten Million Dollars
378378 ($10,000,000.00) for all products combined. If th e amount of claims
379379 exceeds the limits provided in this subsection, the Tax Commission
380380 shall determine the percentage of the refund which establishes the
381381 proportionate share of th e refund which may be claimed by any
382382 taxpayer so that the maximum amount authorized by this subsection is
383383 not exceeded.
384384 E. Any operator making application for an economically at -risk
385385 oil or gas lease status under the provisions of this section shall
386386 submit documentation to the Tax Commission, as determined by the Tax
387387 Commission to be appropriate and necessary.
388388 F. For the purposes of this section, determination of the
389389 economically at-risk oil or gas lease status shall be made by
390390 subtracting from the gross revenue of that lease for the previous
391391 calendar year severance taxes, if any, royalty, operating expenses
392392 of the lease to include expendable workover and recompletion costs
393393 for the previous calendar year, and including overhead costs up to
394394 the maximum overhead percentage allowed by the Council of Petroleum
395395 Accountants Societies (COP AS) guidelines. For the purposes of this
396396 calculation, depreciation, depletion or intangible drilling costs
397397 shall not be included as lease operating expenses.
398398 G. The Tax Commission shall have sole authority to determine if
399399 an oil or gas lease qualifies for certification as an economically
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451451 at-risk oil or gas lease. The Tax Commission shall promulgate rules
452452 governing the certification process.
453453 H. Except as provided in subsection I of this section, gross
454454 production tax exemptions under the provisions of thi s section shall
455455 be limited to production from calendar years 2005 through 2013 and
456456 2022 and subsequent calendar years 2022 through 2024; provided, no
457457 claims for refunds for calen dar years 2013 and before shall be paid
458458 on or after December 31, 2015.
459459 I. Gross production tax exemptions claimed under the provisions
460460 of this section shall be limited to production from calendar years
461461 2014, 2015 and 2016; provided, no claims for refunds for the
462462 calendar years 2014 and 2015 shall be claimed or paid more than
463463 eighteen (18) months after the first day of the fiscal year during
464464 which the refund is first available. For production in calendar
465465 year 2016, no claim for refund filed on or after Jul y 1, 2017, shall
466466 be claimed or paid.
467467 J. Claims for refunds pursuant to the provisions of this
468468 section for production periods ending on or before December 31,
469469 2016, shall be paid pursuant to the provisions of this subsection.
470470 The claims for refunds refere nced herein shall be paid in equal
471471 payments over a period of thirty -six (36) months. The first payment
472472 shall be made after July 1, 2018, but prior to August 1, 2018. The
473473 Tax Commission shall provide, not later than June 30, 2018, to the
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525525 operator or designated interest owner, a schedule of rebates to be
526526 paid out over the thirty -six-month period.
527527 K. Claims for refunds pursuant to the provisions of this
528528 section for production periods beginning and ending on or after
529529 calendar year 2022 in calendar years 2022 through 2024 shall be paid
530530 in the form of a one -time payment.
531531 SECTION 3. AMENDATORY 68 O.S. 2021, Section 2355, as
532532 last amended by Section 1, Chapter 27, 1st Extraordinary Session,
533533 O.S.L. 2023 (68 O.S. Supp. 2024, Section 2355), is amended to read
534534 as follows:
535535 Section 2355. A. Individuals. For all taxable years beginning
536536 after December 31, 1998, and before January 1, 2006, a tax is hereby
537537 imposed upon the Oklahoma taxable income of every resident or
538538 nonresident individual, which tax shall be computed at the option of
539539 the taxpayer under one of the two foll owing methods:
540540 1. METHOD 1.
541541 a. Single individuals and married individuals filing
542542 separately not deducting federal income tax:
543543 (1) 1/2% tax on first $1,000.00 or part thereof,
544544 (2) 1% tax on next $1,500.00 or part thereof,
545545 (3) 2% tax on next $1,250.00 or part thereof,
546546 (4) 3% tax on next $1,150.00 or part thereof,
547547 (5) 4% tax on next $1,300.00 or part thereof,
548548 (6) 5% tax on next $1,500.00 or part thereof,
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600600 (7) 6% tax on next $2,300.00 or part thereof, and
601601 (8) (a) for taxable years beginning after December
602602 31, 1998, and before January 1, 2002, 6.75%
603603 tax on the remainder,
604604 (b) for taxable years beginning on or after
605605 January 1, 2002, and before January 1, 2004,
606606 7% tax on the remainder, and
607607 (c) for taxable years beginning on or after
608608 January 1, 2004, 6.65% tax on the remainder.
609609 b. Married individuals filing jointly and surviving
610610 spouse to the extent and in the manner that a
611611 surviving spouse is permitted to file a joint return
612612 under the provisions of the Internal Revenue Code of
613613 1986, as amended, and heads of household s as defined
614614 in the Internal Revenue Code of 1986, as amended, not
615615 deducting federal income tax:
616616 (1) 1/2% tax on first $2,000.00 or part thereof,
617617 (2) 1% tax on next $3,000.00 or part thereof,
618618 (3) 2% tax on next $2,500.00 or part thereof,
619619 (4) 3% tax on next $2,300.00 or part thereof,
620620 (5) 4% tax on next $2,400.00 or part thereof,
621621 (6) 5% tax on next $2,800.00 or part thereof,
622622 (7) 6% tax on next $6,000.00 or part thereof, and
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674674 (8) (a) for taxable years beginning after December
675675 31, 1998, and before January 1, 200 2, 6.75%
676676 tax on the remainder,
677677 (b) for taxable years beginning on or after
678678 January 1, 2002, and before January 1, 2004,
679679 7% tax on the remainder, and
680680 (c) for taxable years beginni ng on or after
681681 January 1, 2004, 6.65% tax on the remainder.
682682 2. METHOD 2.
683683 a. Single individuals and married individuals filing
684684 separately deducting federal income tax:
685685 (1) 1/2% tax on first $1,000.00 or part thereof,
686686 (2) 1% tax on next $1,500.00 or part th ereof,
687687 (3) 2% tax on next $1,250.00 or part thereof,
688688 (4) 3% tax on next $1,150 .00 or part thereof,
689689 (5) 4% tax on next $1,200.00 or part thereof,
690690 (6) 5% tax on next $1,400.00 or part thereof,
691691 (7) 6% tax on next $1,500.00 or part thereof,
692692 (8) 7% tax on next $1,500.00 or part thereof,
693693 (9) 8% tax on next $2,000.00 or part thereof,
694694 (10) 9% tax on next $3,500.00 or part thereof, and
695695 (11) 10% tax on the remainder.
696696 b. Married individuals filing jointly and surviving
697697 spouse to the extent and in the manner that a
698698
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749749 surviving spouse is permitted to file a joint return
750750 under the provisions of the Internal Revenue Code of
751751 1986, as amended, and heads of households as defined
752752 in the Internal Revenue Code of 1986, as amended,
753753 deducting federal income tax:
754754 (1) 1/2% tax on the first $2,000.00 or part thereof,
755755 (2) 1% tax on the next $3,000.00 or part thereof,
756756 (3) 2% tax on the next $2,500.00 or part thereof,
757757 (4) 3% tax on the next $1,400.00 or part thereof,
758758 (5) 4% tax on the next $1,500.00 or part thereof,
759759 (6) 5% tax on the next $1,600.00 or part thereof,
760760 (7) 6% tax on the next $1,250.00 or part thereof,
761761 (8) 7% tax on the next $1,750.00 or part thereof,
762762 (9) 8% tax on the next $3,000.00 or part thereof,
763763 (10) 9% tax on the next $6,000.00 or part thereof, and
764764 (11) 10% tax on the remainder.
765765 B. Individuals. For all taxable years beginning on or after
766766 January 1, 2008, and ending any tax year which begins after December
767767 31, 2015, for which the determination required pursuant to Sections
768768 4 2355.1F and 5 2355.1G of this act title is made by the State Board
769769 of Equalization, a tax is hereby imposed upon the Oklahoma taxable
770770 income of every resident or nonresident individual, which tax shall
771771 be computed as follows:
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823823 1. Single individuals and married individuals filing
824824 separately:
825825 (a) 1/2% tax on first $1,000.00 or part thereof,
826826 (b) 1% tax on next $1,500.00 or part thereof,
827827 (c) 2% tax on next $1,250.00 or part thereof,
828828 (d) 3% tax on next $1,150.00 or part thereof,
829829 (e) 4% tax on next $2,300.00 or part thereof,
830830 (f) 5% tax on next $1,500.00 or par t thereof,
831831 (g) 5.50% tax on the remainder for the 2008 tax year and
832832 any subsequent tax year unless the rate prescribed by
833833 subparagraph (h) of this paragraph is in effect, and
834834 (h) 5.25% tax on the remainder for the 2009 and subsequent
835835 tax years. The decrea se in the top marginal
836836 individual income tax rate otherwise authorized by
837837 this subparagraph shall be contingent upon the
838838 determination required to be made by the State Board
839839 of Equalization pursuant to Section 2355.1A of this
840840 title.
841841 2. Married individuals filing jointly and surviving spouse to
842842 the extent and in the manner that a su rviving spouse is permitted to
843843 file a joint return under the provisions of the Internal Revenue
844844 Code of 1986, as amended, and heads of households as defined in the
845845 Internal Revenue Code of 1986, as amended:
846846 (a) 1/2% tax on first $2,000.00 or part thereof,
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898898 (b) 1% tax on next $3,000.00 or part thereof,
899899 (c) 2% tax on next $2,500.00 or part thereof,
900900 (d) 3% tax on next $2,300.00 or part thereof,
901901 (e) 4% tax on next $2,400.00 or part the reof,
902902 (f) 5% tax on next $2,800.00 or part thereof,
903903 (g) 5.50% tax on the remai nder for the 2008 tax year and
904904 any subsequent tax year unless the rate prescribed by
905905 subparagraph (h) of this paragraph is in effect, and
906906 (h) 5.25% tax on the remainder for the 2 009 and subsequent
907907 tax years. The decrease in the top marginal
908908 individual income tax rate otherwise authorized by
909909 this subparagraph shall be contingent upon the
910910 determination required to be made by the State Board
911911 of Equalization pursuant to Section 2355. 1A of this
912912 title.
913913 C. Individuals. For all taxable years beginning on or afte r
914914 January 1, 2024 tax year 2024, a tax is hereby imposed upon the
915915 Oklahoma taxable income of every resident or nonresident individual,
916916 which tax shall be computed as follows:
917917 1. Single individuals and married individuals filing
918918 separately:
919919 (a) 0.25% tax on first $1,000.00 or part thereof,
920920 (b) 0.75% tax on next $1,500.00 or part thereof,
921921 (c) 1.75% tax on next $1,250.00 or part thereof,
922922
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973973 (d) 2.75% tax on next $1,150.00 or part there of,
974974 (e) 3.75% tax on next $2,300.00 or part thereof, and
975975 (f) 4.75% tax on the remainder.
976976 2. Married individuals filing jointly and surviving spouse to
977977 the extent and in the manner that a surviving spouse is permitted to
978978 file a joint return under the provi sions of the Internal Revenue
979979 Code of 1986, as amended, and heads of households as defined in the
980980 Internal Revenue Code of 1986, as amended:
981981 (a) 0.25% tax on first $2,000.00 or part thereof,
982982 (b) 0.75% tax on next $3,000.00 or part thereof,
983983 (c) 1.75% tax on next $2,500.00 or part thereof,
984984 (d) 2.75% tax on next $2,300.00 or part there of,
985985 (e) 3.75% tax on next $4,600.00 or part thereof, and
986986 (f) 4.75% tax on the remainder.
987987 No deduction for federal income taxes paid shall be allowed to
988988 any taxpayer to arrive at taxable income.
989989 D. Individuals. For tax year 2025 and subsequent tax years, a
990990 tax is hereby imposed upon the Oklahoma taxable income of every
991991 resident or nonresident individual, which tax shall be computed as
992992 follows:
993993 1. Single individuals and married i ndividuals filing
994994 separately:
995995 (a) 0.0% tax on first $1,000.00 or part thereof,
996996 (b) 0.25% tax on next $1,500.00 or part thereof,
997997
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10481048 (c) 1.25% tax on next $1,250.00 or part thereof,
10491049 (d) 2.25% tax on next $1,150.00 or part thereof,
10501050 (e) 3.25% tax on the next $2,300.00 or part thereof, and
10511051 (f) 4.25% tax on the remainder.
10521052 2. Married individuals filing jointly and surviving spouse to
10531053 the extent and in the manner that a surviving spouse is permitted to
10541054 file a joint return under the provisions of the Internal Revenue
10551055 Code of 1986, as amended, and heads of households as defined in the
10561056 Internal Revenue Code of 1986, as amended:
10571057 (a) 0.0% tax on first $2,000.00 or part thereof,
10581058 (b) 0.25% tax on next $3,000.00 or part thereof,
10591059 (c) 1.25% tax on next $2,500.00 or part thereof ,
10601060 (d) 2.25% tax on next $2,300.00 or part thereof,
10611061 (e) 3.25% tax on the next $4,600.00 or part thereof, and
10621062 (f) 4.25% on the remainder.
10631063 No deduction for federal income taxes paid shall be allowed to
10641064 any taxpayer to arrive at taxable income.
10651065 E. Nonresident aliens. In lieu of the rates set forth in
10661066 subsection A above, there shall be imposed on nonresident aliens, as
10671067 defined in the Internal Revenue Code of 1986, as amended, a tax of
10681068 eight percent (8%) instead of thirty percent (30%) as used in the
10691069 Internal Revenue Code of 1986, as amended, with respect to the
10701070 Oklahoma taxable income of such nonresident aliens as determined
10711071 under the provision of the Oklahoma Income Tax Act.
10721072
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11231123 Every payer of amounts covered by this subsection shall deduct
11241124 and withhold from such amounts paid each payee an amount equal to
11251125 eight percent (8%) thereof. Every payer required to deduct and
11261126 withhold taxes under this subsection shall for each quarterly period
11271127 on or before the last day of the month following the close of each
11281128 such quarterly period, pay over the amount so withheld as taxes to
11291129 the Oklahoma Tax Commission, and shall file a return with each such
11301130 payment. Such return shall be in such form as the Tax Commission
11311131 shall prescribe. Every payer required under this subsection to
11321132 deduct and withhold a tax from a payee shall, as to the total
11331133 amounts paid to each payee during the calendar year, furnish to such
11341134 payee, on or before January 31 , of the succeeding year, a written
11351135 statement showing the name of the payer, the name of the payee and
11361136 the payee’s Social Security account number, if any, the total amount
11371137 paid subject to taxation, and the total amount deducted and withheld
11381138 as tax and such other information as the Tax Commission may require.
11391139 Any payer who fails to withhold or pay to th e Tax Commission any
11401140 sums herein required to be withheld or paid shall be pers onally and
11411141 individually liable therefor to the State of Oklahoma.
11421142 E. F. Corporations. For all taxable years beginning after
11431143 December 31, 2021, a tax is hereby imposed upon the Oklahoma taxable
11441144 income of every corporation doing business within this state or
11451145 deriving income from sources within this state in an amount equal to
11461146 four percent (4%) thereof.
11471147
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11981198 There shall be no additional Oklahoma income tax imposed on
11991199 accumulated taxable income or on undistributed personal holding
12001200 company income as those terms are defined in the Internal Revenue
12011201 Code of 1986, as amended.
12021202 F. G. Certain foreign corporations. In lieu of the tax imposed
12031203 in the first paragraph of subsection D F of this section, for all
12041204 taxable years beginning after December 31, 2021, there shall be
12051205 imposed on foreign corporations, as defined in the Internal Revenue
12061206 Code of 1986, as amended, a tax of four percent (4%) instead of
12071207 thirty percent (30%) as used in the Internal Rev enue Code of 1986,
12081208 as amended, where such income is received from sources with in
12091209 Oklahoma this state, in accordance with the provisions of the
12101210 Internal Revenue Code of 1986, as amended, and the Oklahoma Income
12111211 Tax Act.
12121212 Every payer of amounts covered by thi s subsection shall deduct
12131213 and withhold from such amounts paid each payee an amount equal to
12141214 four percent (4%) thereof. Every payer required to deduct and
12151215 withhold taxes under this subsection shall for each quarterly period
12161216 on or before the last day of the month following the close of each
12171217 such quarterly period, pay over the amount so withheld as taxes to
12181218 the Tax Commission, and shall file a return with each such payment.
12191219 Such return shall be in such form as the Tax Commission shall
12201220 prescribe. Every payer required under this subsection to deduct and
12211221 withhold a tax from a payee shall, as to the total amounts paid to
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12731273 each payee during the calendar year, furnish to such payee, on or
12741274 before January 31, of the succeeding year, a written statement
12751275 showing the name of the payer, the name of the payee and the payee ’s
12761276 Social Security account number, if any, the total amounts paid
12771277 subject to taxation, the total amount deducted and withheld as tax ,
12781278 and such other information as the Tax Commission may require. Any
12791279 payer who fails to withhold or pay to the Tax Commission any sums
12801280 herein required to be withheld or paid shall be personally and
12811281 individually liable therefor to the State of Oklahoma.
12821282 G. H. Fiduciaries. A tax is hereby imposed upon the Oklahoma
12831283 taxable income of every trust and estate at the same rates as are
12841284 provided in subsection B or C subsections B through D of this
12851285 section for single individuals. Fiduciaries are not allowed a
12861286 deduction for any federal income tax paid.
12871287 H. I. Tax rate tables. For all t axable years beginning after
12881288 December 31, 1991, in lieu of the tax imposed by subsection A, B or
12891289 C subsections A through D of this section, as applicable there is
12901290 hereby imposed for each taxable year on the taxable income of every
12911291 individual, whose taxable income for such taxable year does not
12921292 exceed the ceiling amount, a tax determ ined under tables, applicable
12931293 to such taxable year which shall be prescribed by the Tax Commission
12941294 and which shall be in such form as it determines appropriate. In
12951295 the table so prescribed, the amounts of the tax shall be computed on
12961296 the basis of the rates prescribed by subsection A, B or C
12971297
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13481348 subsections A through D of this section. For purposes of this
13491349 subsection, the term “ceiling amount” means, with respect to any
13501350 taxpayer, the amount determined by the Tax Commission for the tax
13511351 rate category in which suc h taxpayer falls.
13521352 SECTION 4. AMENDATORY 68 O.S. 2021, Section 2357.4, is
13531353 amended to read as follows:
13541354 Section 2357.4. A. Except as otherwise provided i n subsection
13551355 F of Section 3658 of this title and in subsections J and K of this
13561356 section, for taxable years beginning after December 31, 1987 tax
13571357 years 1988 through 2024 , there shall be allowed a credit against the
13581358 tax imposed by Section 2355 of this title for:
13591359 1. Investment in qualified depreciable property placed in
13601360 service during those years for use in a manufacturing operation, as
13611361 defined in Section 1352 of this title, which has received a
13621362 manufacturer exemption permit pursuant to the provisions of Sect ion
13631363 1359.2 of this title or a qualified aircraft maintenance or
13641364 manufacturing facility as defined in Section 1357 of this title in
13651365 this state or a qualified web search portal as defined in Section
13661366 1357 of this title; or
13671367 2. A net increase in the number of full-time-equivalent
13681368 employees in a manufacturing operation, as defined in Sec tion 1352
13691369 of this title, which has received a manufacturer exemption permit
13701370 pursuant to the provisions of Section 1359.2 of this title or a
13711371 qualified aircraft maintenance or manu facturing facility defined in
13721372
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14231423 Section 1357 of this title in this state or in a qualified web
14241424 search portal as defined in Section 1357 of this title including
14251425 employees engaged in support services.
14261426 B. Except as otherwise provided in subsection F of Section 3658
14271427 of this title and in subsections J and K of this section, for
14281428 taxable years beginning after December 31, 1998 tax years 1999
14291429 through 2024, there shall be allowed a credit against the tax
14301430 imposed by Section 2355 of this title for:
14311431 1. Investment in qu alified depreciable property with a total
14321432 cost equal to or greater than Forty Million Dollars ($40,000,000.00)
14331433 within three (3) years from the date of initial qualifying
14341434 expenditure and placed in service in this state during those years
14351435 for use in the manufacture of products described by any Industry
14361436 Number contained in Division D o f Part I of the Standard Industrial
14371437 Classification (SIC) Manual, latest revision; or
14381438 2. A net increase in the number of full -time-equivalent
14391439 employees in this state engaged in t he manufacture of any goods
14401440 identified by any Industry Number contained in Division D of Part I
14411441 of the Standard Industrial Classification (SIC) Manual, latest
14421442 revision, if the total cost of qualified depreciable property placed
14431443 in service by the business e ntity within the state equals or exceeds
14441444 Forty Million Dollars ($40,000,000.00 ) within three (3) years from
14451445 the date of initial qualifying expenditure.
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14971497 C. The business entity may claim the credit authorized by
14981498 subsection B of this section for expenditures incurred or for a net
14991499 increase in the number of full -time-equivalent employees after the
15001500 business entity provides proof satisfactory to the Oklahoma Tax
15011501 Commission that the conditions imposed pursuant to paragraph 1 or
15021502 paragraph 2 of subsection B of this section have been satisfied.
15031503 D. If a business entity fails to expend the amou nt required by
15041504 paragraph 1 or paragraph 2 of subsection B of this section within
15051505 the time required, the business entity may not claim the credit
15061506 authorized by subsection B of thi s section but shall be allowed to
15071507 claim a credit pursuant to subsection A of this section if the
15081508 requirements of subsection A of this section are met with respect to
15091509 the investment in qualified depreciable property or net increase in
15101510 the number of full-time-equivalent employees.
15111511 E. The credit provided for in subsection A of this se ction, if
15121512 based upon investment in qualified depreciable property, shall not
15131513 be allowed unless the investment in qualified depreciable property
15141514 is at least Fifty Thousand Dollars ($50,000.00). The credit
15151515 provided for in subsection A or B of this section shall not be
15161516 allowed if the applicable investment is the direct cause of a
15171517 decrease in the number of full -time-equivalent employees. Qualified
15181518 property shall be limited to machin ery, fixtures, equipment,
15191519 buildings or substantial improvements thereto, place d in service in
15201520 this state during the taxable year. The taxable years for which the
15211521
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15721572 credit may be allowed if based upon investment in qualified
15731573 depreciable property shall be mea sured from the year in which the
15741574 qualified property is placed in service. If the credit provided for
15751575 in subsection A or B of this section is calculated on the basis of
15761576 the cost of the qualified property, the credit shall be allowed in
15771577 each of the four (4) subsequent years. If the qualified property on
15781578 which a credit has previously been allowed is acquired from a
15791579 related party, the date such property is placed in service by the
15801580 transferor shall be considered to be the date such property is
15811581 placed in service by the transferee, for purposes of determining the
15821582 aggregate number of years for which credit may be allowed.
15831583 F. The credit provided for in subsection A or B of this
15841584 section, if based upon an increase in the number of full -time-
15851585 equivalent employees, sha ll be allowed in each of the four (4)
15861586 subsequent years only if the level of ne w employees is maintained in
15871587 the subsequent year. In calculating the credit by the number of new
15881588 employees, only those employees whose paid wages or salary were at
15891589 least Seven Thousand Dollars ($7,000.00) during each year the credit
15901590 is claimed shall be included in the calculation. Provided, that the
15911591 first year a credit is claimed for a new employee, such employee may
15921592 be included in the calculation notwithstanding paid wages of l ess
15931593 than Seven Thousand Dollars ($7,000.00) if the employee was hired in
15941594 the last three quarters of the tax year, has wages or salary which
15951595 will result in annual paid wages in excess of Seven Thousand Dollars
15961596
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16471647 ($7,000.00) and the taxpayer submits an affidav it stating that the
16481648 employee’s position will be retained in the following tax year and
16491649 will result in the payment of wages in excess of Seven Thousand
16501650 Dollars ($7,000.00). The number of new employees shall be
16511651 determined by comparing the monthly average nu mber of full-time
16521652 employees subject to Oklahoma income tax withholding for the final
16531653 quarter of the taxable year with the corresponding period of the
16541654 prior taxable year, as substantiated by such reports as may be
16551655 required by the Tax Commission.
16561656 G. The credit allowed by subsection A of this section shall be
16571657 the greater amount of either:
16581658 1. One percent (1%) of the cost of the qualified property in
16591659 the year the property is placed in service; or
16601660 2. Five Hundred Dollars ($500.00) for each new employee. No
16611661 credit shall be allowed in any taxable year for a net increase in
16621662 the number of full-time-equivalent employees if such increase is a
16631663 result of an investment in qualified depreciable property for which
16641664 an income tax credit has been allowed as authorized by th is section.
16651665 H. The credit allowed by subsection B of this section shall be
16661666 the greater amount of either:
16671667 1. Two percent (2%) of the cost of the qualified property in
16681668 the year the property is placed in service; or
16691669 2. One Thousand Dollars ($1,000.00) for each new employee.
16701670
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17211721 No credit shall be allowed in any taxable year for a net
17221722 increase in the number of full -time-equivalent employees if such
17231723 increase is a result of an investment in qualified depreciable
17241724 property for which an income tax credit has been all owed as
17251725 authorized by this section.
17261726 I. Except as provided by subsection G of Section 3658 of this
17271727 title, any credits allowed but not used in any taxable year may be
17281728 carried over in order as follows:
17291729 1. To each of the four (4) years following the year of
17301730 qualification;
17311731 2. To the extent not used in those years in order to each of
17321732 the fifteen (15) years following the initial five -year period;
17331733 3. If a C corporation that otherwise qualified for the credits
17341734 under subsection A of this section subsequently chan ges its
17351735 operating status to that of a pass -through entity which is being
17361736 treated as the same entity for federal tax purposes, the credits
17371737 will continue to be available as if the pass -through entity had
17381738 originally qualified for the credits subject to the li mitations of
17391739 this section;
17401740 4. To the extent not used in paragraphs 1 and 2 of this
17411741 subsection, such credits from qualified depreciable property placed
17421742 in service on or after January 1, 2000, may be utilized in any
17431743 subsequent tax years after the initial tw enty-year period; and
17441744
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17951795 5. Provided, for tax years beginning on or after January 1,
17961796 2016, and ending on or before December 31, 2018, the amount of
17971797 credits available as an offset in a taxable year shall be limited to
17981798 the percentage calculated by the Tax Comm ission pursuant to the
17991799 provisions of subsection L of this section.
18001800 J. No credit otherwise authorized by the provisions of this
18011801 section may be claimed for any event, transaction, investment,
18021802 expenditure or other act occurring on or after July 1, 2010, for
18031803 which the credit would otherwise be allowable until the provisions
18041804 of this subsection shall cease to be operative on July 1, 2012.
18051805 Beginning July 1, 2012, the credit authorized by this section may be
18061806 claimed for any event, transaction, investment, expendi ture or other
18071807 act occurring on or after July 1, 2010, according to the provisi ons
18081808 of this section; provided, credits accrued during the period from
18091809 July 1, 2010, through June 30, 2012, shall be limited to a period of
18101810 two (2) taxable years. The credit shal l be limited in each taxable
18111811 year to fifty percent (50%) of the total amount of the accrued
18121812 credit. Any tax credits which accrue during the period of July 1,
18131813 2010, through June 30, 2012, may not be claimed for any period prior
18141814 to the taxable year beginnin g January 1, 2012. No credits which
18151815 accrue during the period of July 1, 2010, through June 30, 2012, may
18161816 be used to file an amended tax return for any taxable year prior to
18171817 the taxable year beginning January 1, 2012.
18181818
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18691869 K. Beginning January 1, 2017, except with respect to tax
18701870 credits allowed from investment or job creation occurring prior to
18711871 January 1, 2017, the credits authorized by this section shall not be
18721872 allowed for investment or job creation in electric power generation
18731873 by means of wind as described by the North American Industry
18741874 Classification System, No. 221119 221115.
18751875 L. For tax years beginning on or after January 1, 2016, and
18761876 ending on or before December 31, 2018, the total amount of credits
18771877 authorized by this section used to offset tax shall be ad justed
18781878 annually to limit the annual amount of credits to Twenty -five
18791879 Million Dollars ($25,000,000.00). The Tax Commission shall annually
18801880 calculate and publish a percentage by which the credits authorized
18811881 by this section shall be reduced so the total amoun t of credits used
18821882 to offset tax does not exceed Twenty -five Million Dollars
18831883 ($25,000,000.00) per year. The formula to be used for the
18841884 percentage adjustment shall be Twenty -five Million Dollars
18851885 ($25,000,000.00) divided by the credits used to offset tax in the
18861886 second preceding year.
18871887 M. Pursuant to subsection L of this section, in the event the
18881888 total tax credits authorized by this section exceed Twenty -five
18891889 Million Dollars ($25,000,000.00) in any calendar year, the Tax
18901890 Commission shall permit any excess over Twenty-five Million Dollars
18911891 ($25,000,000.00) but shall factor such excess int o the percentage
18921892 adjustment formula for subsequent years.
18931893
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19431943
19441944 SECTION 5. AMENDATORY 68 O.S. 2021, Section 2357.43, is
19451945 amended to read as follows:
19461946 Section 2357.43. For tax years beginning on or after January 1,
19471947 2022, there shall be allowed to a resident individual or a part -year
19481948 resident individual as a credit against the tax imposed by Section
19491949 2355 of this title five percent (5%) of the earned income tax cre dit
19501950 allowed under Section 32 of the Internal Revenue Code of the United
19511951 States 1986, as amended, 26 U.S.C., Section 32, which for the
19521952 taxable year beginning January 1, 2022, and the taxable year
19531953 beginning each January 1 thereafter shall be computed using t he same
19541954 requirements, other than the five percent (5%) amount to compute the
19551955 credit as prescribed by this section which shall remain constant, in
19561956 effect for computation of the earned income tax credit for federal
19571957 income tax purposes for the 2020 income tax year. However, this
19581958 credit shall not be paid in advance pursuant to the prov isions of
19591959 Section 3507 of the Internal Revenue Code of 1986, as amended. For
19601960 tax years which begin on or after January 1, 2022 2022 through 2024,
19611961 if the credit exceeds the tax i mposed by Section 2355 of this title,
19621962 the excess amount shall be refunded to the taxpayer. For tax year
19631963 2025 and subsequent tax years, the credit allowed pursuant to this
19641964 section shall not be used to reduce the income tax liability of the
19651965 taxpayer to less than zero (0). The maximum earned income tax
19661966 credit allowable on the Oklahom a income tax return shall be prorated
19671967
19681968
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20172017
20182018 on the ratio that Oklahoma adjusted gross income bears to the
20192019 federal adjusted gross income.
20202020 SECTION 6. AMENDATORY 68 O.S. 2021, Section 2358, as
20212021 last amended by Section 155, Chapter 452, O.S.L. 2024 (68 O.S. Supp.
20222022 2024, Section 2358), is amended to read as follows:
20232023 Section 2358. For all tax years beginning after December 31,
20242024 1981, taxable income and adjusted gross i ncome shall be adjusted to
20252025 arrive at Oklahoma taxable income and Oklahoma adju sted gross income
20262026 as required by this section.
20272027 A. The taxable income of any taxpayer shall be adjusted to
20282028 arrive at Oklahoma taxable income for corporations and Oklahoma
20292029 adjusted gross income for individuals, as follows:
20302030 1. There shall be added interest income on obligations of any
20312031 state or political subdivision thereto which is not otherwise
20322032 exempted pursuant to other laws of this state, to the extent that
20332033 such interest is not included in taxable income and adjusted gross
20342034 income.
20352035 2. There shall be deduc ted amounts included in such income that
20362036 the state is prohibited from taxing because of the provisions of the
20372037 Federal United States Constitution, the State Oklahoma Constitution,
20382038 federal laws or laws of Oklahoma.
20392039 3. The amount of any federal net operating loss deduction shall
20402040 be adjusted as follows:
20412041
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20922092 a. For carryovers and carrybacks to taxable years
20932093 beginning before January 1, 1981, the amount of any
20942094 net operating loss deduction a llowed to a taxpayer for
20952095 federal income tax purposes shall be reduced to an
20962096 amount which is the same portion thereof as the loss
20972097 from sources within this state, as determined pursuant
20982098 to this section and Section 2362 of this title, for
20992099 the taxable year in which such loss is sustained is of
21002100 the total loss for such year;
21012101 b. For carryovers and carrybacks to taxable years
21022102 beginning after December 31, 1980, the amount of any
21032103 net operating loss deduction allowed for the taxable
21042104 year shall be an amount equal to th e aggregate of the
21052105 Oklahoma net operating loss carryovers and carrybacks
21062106 to such year. Oklahoma net operating losses shall be
21072107 separately determined by reference to Section 172 of
21082108 the Internal Revenue Code of 1986, as amended, 26
21092109 U.S.C., Section 172, as mo dified by the Oklahoma
21102110 Income Tax Act, Section 2351 et seq. of this title,
21112111 and shall be allowed without regard to the existence
21122112 of a federal net operating loss. For tax years
21132113 beginning after December 31, 2000, and ending before
21142114 January 1, 2008, the years to which such losses may be
21152115 carried shall be determined solely by reference to
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21672167 Section 172 of the Internal Revenue Code of 1986, as
21682168 amended, 26 U.S.C., Section 172, with the exception
21692169 that the terms “net operating loss” and “taxable
21702170 income” shall be replaced with “Oklahoma net operating
21712171 loss” and “Oklahoma taxable income ”. For tax years
21722172 beginning after December 31, 2007, and ending before
21732173 January 1, 2009, years to which such losses may be
21742174 carried back shall be limited to two (2) years. For
21752175 tax years beginning after December 31, 2008, the years
21762176 to which such losses may be carried ba ck shall be
21772177 determined solely by reference to Section 172 of the
21782178 Internal Revenue Code of 1986, as amended, 26 U.S.C.,
21792179 Section 172, with the exception that the terms “net
21802180 operating loss” and “taxable income” shall be replaced
21812181 with “Oklahoma net operating loss ” and “Oklahoma
21822182 taxable income”.
21832183 4. Items of the following nature shall be allocated as
21842184 indicated. Allowable deductions attributable to items separately
21852185 allocable in subpara graphs a, b and c of this paragraph, whether or
21862186 not such items of income were actually received, shall be allocated
21872187 on the same basis as those items:
21882188 a. Income from real and tangible personal property, such
21892189 as rents, oil and mining production or royalties, and
21902190 gains or losses from sales of such property, shall be
21912191
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22422242 allocated in accordance with the situs of such
22432243 property;
22442244 b. Income from intangible personal property, such as
22452245 interest, dividends, patent or copyright royalties,
22462246 and gains or losses from sales of s uch property, shall
22472247 be allocated in accordance with the domiciliary situs
22482248 of the taxpayer, except that:
22492249 (1) where such property has acquired a nonunitary
22502250 business or commercial situs apart from the
22512251 domicile of the taxpayer such income shall be
22522252 allocated in accordance with such business or
22532253 commercial situs; interest income from
22542254 investments held to generate working capital for
22552255 a unitary business enterprise shall be included
22562256 in apportionable income; a resident trust or
22572257 resident estate shall be treated as havin g a
22582258 separate commercial or business situs insofar as
22592259 undistributed income is c oncerned, but shall not
22602260 be treated as having a separate commercial or
22612261 business situs insofar as distributed income is
22622262 concerned,
22632263 (2) for taxable years beginning after December 31 ,
22642264 2003, capital or ordinary gains or losses from
22652265 the sale of an ownership interest in a publicly
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23172317 traded partnership, as defined by Section 7704(b)
23182318 of the Internal Revenue Code of 1986, as amended,
23192319 shall be allocated to this state in the ratio of
23202320 the original cost of such partnership ’s tangible
23212321 property in this state to the original cost of
23222322 such partnership’s tangible property everywhere,
23232323 as determined at the time of the sale; if more
23242324 than fifty percent (50%) of the value of the
23252325 partnership’s assets consists of intangible
23262326 assets, capital or ordinary gains or losses from
23272327 the sale of an ownership interest in the
23282328 partnership shall be allocated to this state in
23292329 accordance with the sales factor of the
23302330 partnership for its first full tax period
23312331 immediately preceding its tax period during which
23322332 the ownership interest in the partnership was
23332333 sold; the provisions of this division shall only
23342334 apply if the capital or ordinary gains or losses
23352335 from the sale of an ownership interest in a
23362336 partnership do not constitute qualifyin g gain
23372337 receiving capital treatment as defined in
23382338 subparagraph a of paragraph 2 of subsection F of
23392339 this section,
23402340
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23912391 (3) income from such property which is required to be
23922392 allocated pursuant to the provisions of paragraph
23932393 5 of this subsection shall be allocated as herein
23942394 provided;
23952395 c. Net income or loss from a business activity which is
23962396 not a part of business carried on within or without
23972397 the state of a unitary character shall be separately
23982398 allocated to the state in which such activity is
23992399 conducted;
24002400 d. In the case of a manufacturing or processing
24012401 enterprise the business of which in Oklahoma this
24022402 state consists solely of marketing its products by:
24032403 (1) sales having a situs without this state, shipped
24042404 directly to a point from without the state to a
24052405 purchaser within the state, commonly known as
24062406 interstate sales,
24072407 (2) sales of the product stored in public warehouses
24082408 within the state pursuant to “in transit”
24092409 tariffs, as prescribed and allowed by the
24102410 Interstate Commerce Commission, to a purchaser
24112411 within the state,
24122412 (3) sales of the product stored in public warehouses
24132413 within the state where the shipment to such
24142414 warehouses is not covered by “in transit”
24152415
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24662466 tariffs, as prescribed and allowed by the
24672467 Interstate Commerce Commission, to a purchaser
24682468 within or without the state,
24692469 the Oklahoma net income shall, at the option of the
24702470 taxpayer, be that portion of the to tal net income of
24712471 the taxpayer for federal income tax purposes derived
24722472 from the manufacture and/or processing and sales
24732473 everywhere as determined by the ratio of the sales
24742474 defined in this section made to the purchaser within
24752475 the state to the total sales everywhere. The term
24762476 “public warehouse” as used in this subparagraph means
24772477 a licensed public warehouse, the principal business of
24782478 which is warehousing merchandise for the public;
24792479 e. In the case of insurance companies, Oklahoma taxable
24802480 income shall be taxable income of the taxpayer for
24812481 federal tax purposes, as adjusted for the adjustments
24822482 provided pursuant to the provisions of paragraphs 1
24832483 and 2 of this subsection, apportioned as fol lows:
24842484 (1) except as otherwise provided by division (2) of
24852485 this subparagraph, taxable income of an insurance
24862486 company for a taxable year shall be apportioned
24872487 to this state by multiplying such income by a
24882488 fraction, the numerator of which is the direct
24892489 premiums written for insurance on property or
24902490
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25412541 risks in this state, and the denominato r of which
25422542 is the direct premiums written for insurance on
25432543 property or risks everywhere. For purposes of
25442544 this subsection, the term “direct premiums
25452545 written” means the total amou nt of direct
25462546 premiums written, assessments and annuity
25472547 considerations as reported for the taxable year
25482548 on the annual statement filed by the company with
25492549 the Insurance Commissioner in the form approved
25502550 by the National Association of Insurance
25512551 Commissioners, or such other form as may be
25522552 prescribed in lieu thereof,
25532553 (2) if the principal source of premiums written by an
25542554 insurance company consists of premiums for
25552555 reinsurance accepted by it, the taxable income of
25562556 such company shall be apportioned to this state
25572557 by multiplying such income by a fraction, the
25582558 numerator of which is the sum of (a) direct
25592559 premiums written for insurance on property or
25602560 risks in this state, plus (b) premiums written
25612561 for reinsurance accepted in respect of property
25622562 or risks in this state, and the denominator of
25632563 which is the sum of (c) direct premiums written
25642564 for insurance on property or risks everywhere,
25652565
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26162616 plus (d) premiums written for reinsurance
26172617 accepted in respect of property or risks
26182618 everywhere. For purposes of this paragraph,
26192619 premiums written for reinsurance accepted in
26202620 respect of property or risks in this state,
26212621 whether or not otherwise determinable, may at the
26222622 election of the company be determined on the
26232623 basis of the proportion which premiums written
26242624 for insurance accepted from companies
26252625 commercially domiciled in Oklahoma this state
26262626 bears to premiums written for rei nsurance
26272627 accepted from all sources, or alternatively in
26282628 the proportion which the sum of the direct
26292629 premiums written for insurance on property or
26302630 risks in this state by each cedin g company from
26312631 which reinsurance is accepted bears to the sum of
26322632 the total direct premiums written by each such
26332633 ceding company for the taxable year.
26342634 5. The net income or loss remaining after the separate
26352635 allocation in paragraph 4 of this subsection, being that which is
26362636 derived from a unitary business enterprise, shall be apportione d to
26372637 this state on the basis of the arithmetical average of three factors
26382638 consisting of property, payroll and sales or gross revenue
26392639 enumerated as subparagraphs a, b and c of thi s paragraph. Net
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26912691 income or loss as used in this paragraph includes that derived from
26922692 patent or copyright royalties, purchase discounts, and interest on
26932693 accounts receivable relating to or arising from a business activity,
26942694 the income from which is apportion ed pursuant to this subsection,
26952695 including the sale or other disposition of suc h property and any
26962696 other property used in the unitary enterprise. Deductions used in
26972697 computing such net income or loss shall not include taxes based on
26982698 or measured by income. P rovided, for corporations whose property
26992699 for purposes of the tax imposed by Section 2355 of this title has an
27002700 initial investment cost equaling or exceeding Two Hundred Million
27012701 Dollars ($200,000,000.00) and such investment is made on or after
27022702 July 1, 1997, or for corporations which expand their property or
27032703 facilities in this state an d such expansion has an investment cost
27042704 equaling or exceeding Two Hundred Million Dollars ($200,000,000.00)
27052705 over a period not to exceed three (3) years, and such expansion is
27062706 commenced on or after January 1, 2000, the three factors shall be
27072707 apportioned with property and payroll, each comprising twenty -five
27082708 percent (25%) of the apportionment factor and sales comprising fifty
27092709 percent (50%) of the apportionment factor. The apportion ment
27102710 factors shall be computed as follows:
27112711 a. The property factor is a fractio n, the numerator of
27122712 which is the average value of the taxpayer ’s real and
27132713 tangible personal property owned or rented and used in
27142714 this state during the tax period and the denomina tor
27152715
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27662766 of which is the average value of all the taxpayer ’s
27672767 real and tangible personal property everywhere owned
27682768 or rented and used during the tax period.
27692769 (1) Property, the income from which is separately
27702770 allocated in paragraph 4 of this subsection,
27712771 shall not be included in determining this
27722772 fraction. The numerator of the fraction shall
27732773 include a portion of the investment in
27742774 transportation and other equipment having no
27752775 fixed situs, such as rolling stock, buses, trucks
27762776 and trailers, including machinery and equip ment
27772777 carried thereon, airplanes, salespersons ’
27782778 automobiles and other similar equipment, in the
27792779 proportion that miles traveled in Oklahoma this
27802780 state by such equipment bears to total miles
27812781 traveled,
27822782 (2) Property owned by the taxpayer is valued at its
27832783 original cost. Property rented by the taxpayer
27842784 is valued at eight times the net ann ual rental
27852785 rate. Net annual rental rate is the annual
27862786 rental rate paid by the taxpayer, less any annual
27872787 rental rate received by the taxpayer from
27882788 subrentals,
27892789
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28402840 (3) The average value of property shall be determined
28412841 by averaging the values at the beginning and
28422842 ending of the tax period but the Oklahoma Tax
28432843 Commission may require the averaging of monthly
28442844 values during the tax period if reasonably
28452845 required to reflect properly the averag e value of
28462846 the taxpayer’s property;
28472847 b. The payroll factor is a fraction, the n umerator of
28482848 which is the total compensation for services rendered
28492849 in the state during the tax period, and the
28502850 denominator of which is the total compensation for
28512851 services rendered everywhere during the tax period.
28522852 “Compensation”, as used in this subsection , means
28532853 those paid-for services to the extent related to the
28542854 unitary business but does not include officers ’
28552855 salaries, wages and other compensation.
28562856 (1) In the case of a transpor tation enterprise, the
28572857 numerator of the fraction shall include a portion
28582858 of such expenditure in connection with employees
28592859 operating equipment over a fixed route, such as
28602860 railroad employees, airline pilots, or bus
28612861 drivers, in this state only a part of the t ime,
28622862 in the proportion that mileage traveled in
28632863
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29142914 Oklahoma this state bears to total mileage
29152915 traveled by such employees,
29162916 (2) In any case the numerator of the fraction shall
29172917 include a portion of such expenditures in
29182918 connection with itinerant employees, such a s
29192919 traveling salespersons, in this state only a part
29202920 of the time, in the propor tion that time spent in
29212921 Oklahoma this state bears to total time spent in
29222922 furtherance of the enterprise by such employees;
29232923 c. The sales factor is a fraction, the numerator of whic h
29242924 is the total sales or gross revenue of the taxpayer in
29252925 this state during the tax period, and the denominator
29262926 of which is the total sales or gross revenue of the
29272927 taxpayer everywhere during the tax period. “Sales”,
29282928 as used in this subsection , does not include sales or
29292929 gross revenue which are separately allocated in
29302930 paragraph 4 of this subsection.
29312931 (1) Sales of tangible personal property have a situs
29322932 in this state if the property is delivered or
29332933 shipped to a purchaser other than the United
29342934 States government, within this state regardless
29352935 of the FOB Freight on Board (FOB) point or other
29362936 conditions of the sale; or the property is
29372937 shipped from an office, store, warehouse, factory
29382938
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29892989 or other place of storage in this state and (a)
29902990 the purchaser is the United States g overnment or
29912991 (b) the taxpayer is not doing business in the
29922992 state of the destination of the shipment.
29932993 (2) In the case of a railroad or interurban railway
29942994 enterprise, the numerator of the fraction shall
29952995 not be less than the allocation of revenues to
29962996 this state as shown in its annual report to the
29972997 Corporation Commission.
29982998 (3) In the case of an airline, truck or bus
29992999 enterprise or freight car, tank car, refrigerator
30003000 car or other railroad equipment enterprise, the
30013001 numerator of the fraction shall include a portion
30023002 of revenue from interstate transportation in the
30033003 proportion that interstate mi leage traveled in
30043004 Oklahoma this state bears to total interstate
30053005 mileage traveled.
30063006 (4) In the case of an oil, gasoline or gas pipeline
30073007 enterprise, the numerator of the fraction sh all
30083008 be either the total of traffic units of the
30093009 enterprise within Oklahoma this state or the
30103010 revenue allocated to Oklahoma this state based
30113011 upon miles moved, at the option of the taxpayer,
30123012 and the denominator of which shall be the total
30133013
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30643064 of traffic units of the enterprise or the revenue
30653065 of the enterprise everywhere as appropriate to
30663066 the numerator. A “traffic unit” is hereby
30673067 defined as the transportation for a distance of
30683068 one (1) mile of one (1) barrel of oil, one (1)
30693069 gallon of gasoline or one thousand (1,00 0) cubic
30703070 feet of natural or casinghead gas, as the case
30713071 may be.
30723072 (5) In the case of a telephone or telegraph or other
30733073 communication enterprise, the numerator of the
30743074 fraction shall include that portion of the
30753075 interstate revenue as is allocated pursuant to
30763076 the accounting procedures prescribed by the
30773077 Federal Communications Commission; p rovided that
30783078 in respect to each corporation or business entity
30793079 required by the Federal Communications Commission
30803080 to keep its books and records in accordance with
30813081 a uniform system of accounts prescribed by such
30823082 Commission, the intrastate net income shall be
30833083 determined separately in the manner provided by
30843084 such uniform system of accounts and only the
30853085 interstate income shall be subject to allocation
30863086 pursuant to the provisions of this subsection.
30873087 Provided further, that the gross revenue factors
30883088
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31393139 shall be those as are determined pursuant to the
31403140 accounting procedures prescribed by the Federal
31413141 Communications Commission.
31423142 In any case where the apportionment of the three factors
31433143 prescribed in this paragraph attributes to Oklahoma this state a
31443144 portion of net income of the enterprise out of all appropriate
31453145 proportion to the property owned and/or business transacted within
31463146 this state, because of the fact that one or more of the factors so
31473147 prescribed are not employed to any appreciable extent in furtherance
31483148 of the enterprise; or because one or more factors not so prescribed
31493149 are employed to a considerable extent in furtherance of the
31503150 enterprise; or because of other reasons, the Tax Commission is
31513151 empowered to permit, after a showing by taxpayer that an excessive
31523152 portion of net income has been attributed to Oklahoma this state, or
31533153 require, when in its judgment an insufficient portion of net income
31543154 has been attributed to Oklahoma this state, the elimination,
31553155 substitution, or use of additional factors, or reduction or increase
31563156 in the weight of such prescribed factors. Provided, however, that
31573157 any such variance from such prescribed factors which has the effect
31583158 of increasing the portion of net income attrib utable to Oklahoma
31593159 this state must not be inherently arbitrary, and application of the
31603160 recomputed final apportionment to the net income of the enterprise
31613161 must attribute to Oklahoma this state only a reasonable portion
31623162 thereof.
31633163
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32143214 6. For calendar years 1997 a nd 1998, the owner of a new or
32153215 expanded agricultural commodity processing faci lity in this state
32163216 may exclude from Oklahoma taxable income, or in the case of an
32173217 individual, the Oklahoma adjusted gross income, fifteen percent
32183218 (15%) of the investment by the o wner in the new or expanded
32193219 agricultural commodity processing facility. For calendar year 1999,
32203220 and all subsequent years, the percentage, not to exceed fifteen
32213221 percent (15%), available to the owner of a new or expanded
32223222 agricultural commodity processing fa cility in this state claiming
32233223 the exemption shall be adjusted annually so that the total estimated
32243224 reduction in tax liability does not exceed One Million Dollars
32253225 ($1,000,000.00) annually. The Tax Commission shall promulgate rules
32263226 for determining the perce ntage of the investment which each eligible
32273227 taxpayer may exclude. The exclusion provided by this paragraph
32283228 shall be taken in the taxable year when the investment is made. In
32293229 the event the total reduction in tax liability authorized by this
32303230 paragraph exceeds One Million Dollars ($1,000,000.00) in any
32313231 calendar year, the Tax Commissi on shall permit any excess over One
32323232 Million Dollars ($1,000,000.00) and shall factor such excess into
32333233 the percentage for subsequent years. Any amount of the exemption
32343234 permitted to be excluded pursuant to the provisions of this
32353235 paragraph but not used in any year may be carried forward as an
32363236 exemption from income pursuant to the provisions of this paragraph
32373237
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32883288 for a period not exceeding six (6) years following the year in which
32893289 the investment was originally made.
32903290 For purposes of this paragraph:
32913291 a. “Agricultural commodity processing facility ” means
32923292 building buildings, structures, fixtures and
32933293 improvements used or operated primarily for the
32943294 processing or production of marketable products from
32953295 agricultural commodities. The term shall also mean a
32963296 dairy operation that requires a depreciable investment
32973297 of at least Two Hundred Fifty Thousand Dollars
32983298 ($250,000.00) and which produces milk from dairy cows.
32993299 The term does not include a facility t hat provides
33003300 only, and nothing more than, storage, cleaning, drying
33013301 or transportation of agricultural commodities, and
33023302 b. “Facility” means each part of the facility which is
33033303 used in a process primarily for:
33043304 (1) the processing of agricultural commodities,
33053305 including receiving or storing agricultural
33063306 commodities, or the production of milk at a dairy
33073307 operation,
33083308 (2) transporting the agricultural commodities or
33093309 product before, during or after the processing,
33103310 or
33113311
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33623362 (3) packaging or otherwise preparing the product for
33633363 sale or shipment.
33643364 7. Despite any provision to the contrary in paragraph 3 of this
33653365 subsection, for taxable years beginning after December 31, 1999, in
33663366 the case of a taxpayer which has a farming loss, such farming loss
33673367 shall be considered a net operating l oss carryback in accordance
33683368 with and to the extent of the Internal Revenue Code of 1986, as
33693369 amended, 26 U.S.C., Section 172(b)(G) 172(b)(1)(B). However, the
33703370 amount of the net operating loss carryback shall not exceed the
33713371 lesser of:
33723372 a. Sixty Thousand Dolla rs ($60,000.00), or
33733373 b. the loss properly shown on Schedule F of the Internal
33743374 Revenue Service Form 1040 reduced by one -half (1/2) of
33753375 the income from all other sources other than reflected
33763376 on Schedule F.
33773377 8. In taxable years beginning after December 31, 1995 , all
33783378 qualified wages equal to the federal income tax credit set forth in
33793379 26 U.S.C.A., Section 45A, shall be deducted from taxable income.
33803380 The deduction allowed pursuant to this paragraph shall only be
33813381 permitted for the tax years in which the federal tax credit pursuant
33823382 to 26 U.S.C.A., Section 45A, is allowed. For purposes of this
33833383 paragraph, “qualified wages” means those wages used to calculate the
33843384 federal credit pursuant to 26 U.S.C.A., Section 45A.
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34363436 9. In taxable years beginning after December 31, 2005, an
34373437 employer that is eligible for and utilizes the Safety Pays OSHA
34383438 Consultation Service provided by the Oklahoma Department of Labor
34393439 shall receive an exemption from taxable income in the amount of One
34403440 Thousand Dollars ($1,000.00) for the tax year that the service is
34413441 utilized.
34423442 10. For taxable years beginning on or after January 1, 2010,
34433443 there shall be added to Oklahoma taxable income an amount equal to
34443444 the amount of deferred income not included in such taxable income
34453445 pursuant to Section 108(i)(1) of the In ternal Revenue Code of 1986
34463446 as amended by Section 1231 of the American Recovery and Reinvestment
34473447 Act of 2009 (P.L. No. 111 -5). There shall be subtracted from
34483448 Oklahoma taxable income an amount equal to the amount of deferred
34493449 income included in such taxable income pursuant to Section 108(i)(1)
34503450 of the Internal Revenue Code of 1986 as amended by Section 1231 of
34513451 the American Recovery and Reinvestment Act of 2009 (P.L. No. 111 -5).
34523452 11. For taxable years beginning on or after January 1, 2019,
34533453 there shall be subtr acted from Oklahoma taxable income or adjusted
34543454 gross income any item of income or gain, and there shall be added to
34553455 Oklahoma taxable income or adjusted gross income any item of loss or
34563456 deduction that in the absence of an election pursuant to the
34573457 provisions of the Pass-Through Entity Tax Equity Act of 2019 would
34583458 be allocated to a mem ber or to an indirect member of an electing
34593459 pass-through entity pursuant to Section 2351 et seq. of this title,
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35113511 if (i) the electing pass -through entity has accounted for such ite m
35123512 in computing its Oklahoma net entity income or loss pursuant to the
35133513 provisions of the Pass -Through Entity Tax Equity Act of 2019, and
35143514 (ii) the total amount of tax attributable to any resulting Oklahoma
35153515 net entity income has been paid. The Oklahoma Tax C ommission shall
35163516 promulgate rules for the reporting of such exclusion to direct and
35173517 indirect members of the electing pass -through entity. As used in
35183518 this paragraph, “electing pass-through entity”, “indirect member”,
35193519 and “member” shall be defined in the sam e manner as prescribed by
35203520 Section 2355.1P-2 of this title. Notwithstanding the application of
35213521 this paragraph, the adjusted tax basis of any ownership interest in
35223522 a pass-through entity for purposes of Section 2351 et seq. of this
35233523 title shall be equal to it s adjusted tax basis for federal income
35243524 tax purposes.
35253525 B. 1. The taxable inco me of any corporation shall be further
35263526 adjusted to arrive at Oklahoma taxable income, except those
35273527 corporations electing treatment as provided in subchapter S of the
35283528 Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 1361
35293529 et seq., and Section 2365 of this title, deductions pursuant to the
35303530 provisions of the Accelerated Cost Recovery System as defined
35313531 provided and allowed in the Economic Recovery Tax Act of 1981,
35323532 Public Law 97-34, 26 U.S.C., Section 168, for depreciation of assets
35333533 placed into service after December 31, 1981, shall not be allowed in
35343534 calculating Oklahoma taxable income. Such corporations shall be
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35863586 allowed a deduction for depreciation of assets placed into se rvice
35873587 after December 31, 1981, in accordance with provisions of the
35883588 Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 1 et
35893589 seq., in effect immediately prior to the enactment of the
35903590 Accelerated Cost Recovery System. The Oklahoma tax basis for a ll
35913591 such assets placed into service after December 31, 1981, calculated
35923592 in this section shall be retained and utilized for all Oklahoma
35933593 income tax purposes through the final disposition of such assets.
35943594 Notwithstanding any other provisions of the Oklahoma In come Tax
35953595 Act, Section 2351 et seq. of this title, or of the Internal Revenue
35963596 Code of 1986, as amended, to the contrary, this subsection shall
35973597 control calculation of depreciation of assets placed into service
35983598 after December 31, 1981, and before January 1, 1 983.
35993599 For assets placed in service and held by a corporation in which
36003600 accelerated cost recovery system the Accelerated Cost Recovery
36013601 System was previously disallowed, an adjustment to taxable income is
36023602 required in the first taxable year beginning after Dece mber 31,
36033603 1982, to reconcile the basis of such assets to the basis allowed in
36043604 the Internal Revenue Code of 1986, as amended. The purpose of this
36053605 adjustment is to equalize the basis and allowance for depreciation
36063606 accounts between that reported to the Intern al Revenue Service and
36073607 that reported to Oklahoma this state.
36083608 2. For tax years beginning on or after January 1, 2009, and
36093609 ending on or before December 31, 2009, there shall be added to
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36613661 Oklahoma taxable income any amount in excess of One Hundred Seventy -
36623662 five Thousand Dollars ($175,000.00) which has been deducted as a
36633663 small business expense under Internal Revenue Code of 1986, as
36643664 amended, Section 179 as provided in the American Recovery and
36653665 Reinvestment Act of 2009.
36663666 C. 1. For taxable years beginning after D ecember 31, 1987, the
36673667 taxable income of any corporation shall be further adjus ted to
36683668 arrive at Oklahoma taxable income for transfers of technology to
36693669 qualified small businesses located in Oklahoma this state. Such
36703670 transferor corporation shall be allowed a n exemption from taxable
36713671 income of an amount equal to the amount of royalty payment received
36723672 as a result of such transfer; provided, however, such amount shall
36733673 not exceed ten percent (10%) of the amount of gross proceeds
36743674 received by such transferor corpora tion as a result of the
36753675 technology transfer. Such exemption shall be allowed for a period
36763676 not to exceed ten (10) years from the date of receipt of the first
36773677 royalty payment accruing from such transfer. No exemption may be
36783678 claimed for transfers of technol ogy to qualified small businesses
36793679 made prior to January 1, 1988.
36803680 2. For purposes of this subsection:
36813681 a. “Qualified small business ” means an entity, whether
36823682 organized as a corporation, partnership, or
36833683 proprietorship, organized for profit with its
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37353735 principal place of business located within this state
37363736 and which meets the following cri teria:
37373737 (1) Capitalization of not more than Two Hundred Fifty
37383738 Thousand Dollars ($250,000.00),
37393739 (2) Having at least fifty percent (50%) of its
37403740 employees and assets located in Oklahoma this
37413741 state at the time of the transfer, and
37423742 (3) Not a subsidiary or affiliate of the transferor
37433743 corporation;
37443744 b. “Technology” means a proprietary process, formula,
37453745 pattern, device or compilation of scientific or
37463746 technical information which is not in the public
37473747 domain;
37483748 c. “Transferor corporation ” means a corporation which is
37493749 the exclusive and undisputed owner of the technology
37503750 at the time the transfer is made; and
37513751 d. “Gross proceeds” means the total amount of
37523752 consideration for the transfer of technology, w hether
37533753 the consideration is in money or otherwise.
37543754 D. 1. For taxable years beginning after December 31, 2005, the
37553755 taxable income of any corporation, estate or trust, shall be further
37563756 adjusted for qualifying gains receiving capital treatment. Such
37573757 corporations, estates or trusts shall be allowed a deduction from
37583758 Oklahoma taxable income for one hundred percent (100%) of the amount
37593759
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38103810 for tax years 2006 through 2024 and , for tax year 2025 and
38113811 subsequent tax years, fifty percent (50%) of the amount of
38123812 qualifying gains receiving capital treatment earned by the
38133813 corporation, estate or trust during the taxable year and included in
38143814 the federal taxable income of such corporation, estate or trust.
38153815 2. As used in this subsection:
38163816 a. “qualifying gains receiving capital t reatment” means
38173817 the amount of net capital gains, as defined in Section
38183818 1222(11) of the Internal Revenue Code of 1986, as
38193819 amended, included in the federal income tax return of
38203820 the corporation, estate or trust that result from:
38213821 (1) the sale of real property or tangible personal
38223822 property located within Oklahoma this state that
38233823 has been directly or indirectly owned by the
38243824 corporation, estate or trust for a holding period
38253825 of at least five (5) years prior to the date of
38263826 the transaction from which such net capital gains
38273827 arise,
38283828 (2) the sale of stock or on the sale of an ownership
38293829 interest in an Oklahoma company, limited
38303830 liability company, or partnership where such
38313831 stock or ownership interest has been directly or
38323832 indirectly owned by the corporation, estate or
38333833 trust for a holding period of at least three (3)
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38853885 years prior to the date of the transaction from
38863886 which the net capital gains arise, or
38873887 (3) the sale of real property, tangible personal
38883888 property or intangible personal property located
38893889 within Oklahoma this state as part of the sale of
38903890 all or substantially all of the assets of an
38913891 Oklahoma company, limited liability company, or
38923892 partnership where such property has been directly
38933893 or indirectly owned by such entity owned by the
38943894 owners of such entity, and used in or derived
38953895 from such entity for a period of at least three
38963896 (3) years prior to the date of the transaction
38973897 from which the net capital gains arise,
38983898 b. “holding period” means an uninterrupted period of
38993899 time. The holding period shall include any additional
39003900 period when the property was held by another
39013901 individual or entity, if such additional peri od is
39023902 included in the taxpayer ’s holding period for the
39033903 asset pursuant to the Internal Revenue Code of 1986,
39043904 as amended,
39053905 c. “Oklahoma company”, “limited liability company ”, or
39063906 “partnership” means an entity whose primary
39073907 headquarters have been located in Oklahoma this state
39083908 for at least three (3) uninterrupted years prior to
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39603960 the date of the transaction from which the net capital
39613961 gains arise,
39623962 d. “direct” means the taxpayer directly owns the asset,
39633963 and
39643964 e. “indirect” means the taxpayer owns an interest in a
39653965 pass-through entity (or chain of pass -through
39663966 entities) that sells the asset that gives rise to the
39673967 qualifying gains receiving capital treatment.
39683968 (1) With respect to sales of real p roperty or
39693969 tangible personal property located within
39703970 Oklahoma this state, the deduction described in
39713971 this subsection shall not apply unless the pass -
39723972 through entity that makes the sale has held the
39733973 property for not less than five (5) uninterrupted
39743974 years prior to the date of the transaction that
39753975 created the capital gain, and each pass -through
39763976 entity included in the chain of ownership has
39773977 been a member, partner, or shareholder of the
39783978 pass-through entity in the tier immediately below
39793979 it for an uninterrupted per iod of not less than
39803980 five (5) years.
39813981 (2) With respect to sales of stock or ownership
39823982 interest in or sales of all or substantially all
39833983 of the assets of an Oklahoma company, limited
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40354035 liability company, or partnership, the deduction
40364036 described in this subsectio n shall not apply
40374037 unless the pass-through entity that makes the
40384038 sale has held the stock or ownership interest or
40394039 the assets for not less than three (3)
40404040 uninterrupted years prior to the date of the
40414041 transaction that created the capital gain, and
40424042 each pass-through entity included in the chain of
40434043 ownership has been a member, partner or
40444044 shareholder of the pass -through entity in the
40454045 tier immediately below it for an uninterrupted
40464046 period of not less than three (3) years.
40474047 E. The Oklahoma adjusted gross income of an y individual
40484048 taxpayer shall be further adjusted as follows to arrive at Oklaho ma
40494049 taxable income:
40504050 1. a. In the case of individuals, there shall be added or
40514051 deducted, as the case may be, the difference necessary
40524052 to allow personal exemptions of One Thousand D ollars
40534053 ($1,000.00) in lieu of the personal exemptions allowed
40544054 by the Internal Revenue Code of 1986, as amended.
40554055 b. There shall be allowed an additional exemption of One
40564056 Thousand Dollars ($1,000.00) for each taxpayer or
40574057 spouse who is blind at the close of t he tax year. For
40584058 purposes of this subparagraph, an individual is blind
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41104110 only if the central visual acuity of the individual
41114111 does not exceed 20/200 in the better eye with
41124112 correcting lenses, or if the visual acuity of the
41134113 individual is greater than 20/200, b ut is accompanied
41144114 by a limitation in the fields of vision such that the
41154115 widest diameter of the visual field subtends an angle
41164116 no greater than twenty (20) degrees.
41174117 c. There shall be allowed an additional exemption of One
41184118 Thousand Dollars ($1,000.00) for eac h taxpayer or
41194119 spouse who is sixty-five (65) years of age or older at
41204120 the close of the tax year based upon the filing status
41214121 and federal adjusted gross income of the taxpayer.
41224122 Taxpayers with the following filing status may claim
41234123 this exemption if the feder al adjusted gross income
41244124 does not exceed:
41254125 (1) Twenty-five Thousand Dollars ($25,000.00) if
41264126 married and filing jointly,
41274127 (2) Twelve Thousand Five Hundred Dollars ($12,500.00)
41284128 if married and filing separately,
41294129 (3) Fifteen Thousand Dollars ($15,000.00) if sing le,
41304130 and
41314131 (4) Nineteen Thousand Dollars ($19,000.00) if a
41324132 qualifying head of hou sehold.
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41844184 Provided, for taxable years beginning after December
41854185 31, 1999, amounts included in the calculation of
41864186 federal adjusted gross income pursuant to the
41874187 conversion of a tradit ional individual retirement
41884188 account to a Roth individual retirement account shall
41894189 be excluded from federal adjusted gross income for
41904190 purposes of the income thresholds provided in this
41914191 subparagraph.
41924192 2. a. For taxable years beginning on or before December 31 ,
41934193 2005, in the case of individuals who use the standard
41944194 deduction in determini ng taxable income, there shall
41954195 be added or deducted, as the case may be, the
41964196 difference necessary to allow a standard deduction in
41974197 lieu of the standard deduction allowed by the I nternal
41984198 Revenue Code of 1986, as amended, in an amount equal
41994199 to the larger of fifteen percent (15%) of the Oklahoma
42004200 adjusted gross income or One Thousand Dollars
42014201 ($1,000.00), but not to exceed Two Thousand Dollars
42024202 ($2,000.00), except that in the case of a married
42034203 individual filing a separate return such deduction
42044204 shall be the larger of fifteen percent (15%) of such
42054205 Oklahoma adjusted gross income or Five Hundred Dollars
42064206 ($500.00), but not to exceed the maximum amount of One
42074207 Thousand Dollars ($1,000.00).
42084208
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42594259 b. For taxable years beginning on or after January 1,
42604260 2006, and before January 1, 2007, in the case of
42614261 individuals who use the standard deduction in
42624262 determining taxable income, there shall be added or
42634263 deducted, as the case may be, the difference necessary
42644264 to allow a standard deduction in lieu of the standard
42654265 deduction allowed by the Int ernal Revenue Code of
42664266 1986, as amended, in an amount equal to:
42674267 (1) Three Thousand Dollars ($3,000.00), if the filing
42684268 status is married filing joint, head of household
42694269 or qualifying widow, or
42704270 (2) Two Thousand Dollars ($2,000.00), if the filing
42714271 status is single or married filing separate.
42724272 c. For the taxable year beginning on January 1, 2007, and
42734273 ending December 31, 2007, in the case of individuals
42744274 who use the standard deduction in d etermining taxable
42754275 income, there shall be added or deducted, as the case
42764276 may be, the difference necessary to allow a standard
42774277 deduction in lieu of the standard deduction allowed by
42784278 the Internal Revenue Code of 1986, as amended, in an
42794279 amount equal to:
42804280 (1) Five Thousand Five Hundred Dollars ($5,500.00),
42814281 if the filing status is married filing joint or
42824282 qualifying widow, or
42834283
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43344334 (2) Four Thousand One Hundred Twenty -five Dollars
43354335 ($4,125.00) for a head of household, or
43364336 (3) Two Thousand Seven Hundred Fifty Dollars
43374337 ($2,750.00), if the filing status is single or
43384338 married filing separate.
43394339 d. For the taxable year beginning on January 1, 2008, and
43404340 ending December 31, 2008, in the case of individuals
43414341 who use the standard deduction in determining taxable
43424342 income, there shall be a dded or deducted, as the case
43434343 may be, the difference necessary to allow a standard
43444344 deduction in lieu of the standard deduction allowed by
43454345 the Internal Revenue Code of 1986, as amended, in an
43464346 amount equal to:
43474347 (1) Six Thousand Five Hundred Dollars ($6,500.00 ), if
43484348 the filing status is married filing joint or
43494349 qualifying widow,
43504350 (2) Four Thousand Eight Hundred Seventy -five Dollars
43514351 ($4,875.00) for a head of household, or
43524352 (3) Three Thousand Two Hundred Fifty Dollars
43534353 ($3,250.00), if the filing status is single or
43544354 married filing separate.
43554355 e. For the taxable year beginning on January 1, 2009, and
43564356 ending December 31, 2009, in the case of individuals
43574357 who use the standard deduction in determining taxable
43584358
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44094409 income, there shall be added or deducted, as the case
44104410 may be, the difference necessary to allow a standard
44114411 deduction in lieu of the standard deduc tion allowed by
44124412 the Internal Revenue Code of 1986, as amended, in an
44134413 amount equal to:
44144414 (1) Eight Thousand Five Hundred Dollars ($8,500.00),
44154415 if the filing status is married filing joint or
44164416 qualifying widow,
44174417 (2) Six Thousand Three Hundred Seventy -five Dollars
44184418 ($6,375.00) for a head of household, or
44194419 (3) Four Thousand Two Hundred Fifty Dollars
44204420 ($4,250.00), if the filing status is single or
44214421 married filing separate.
44224422 Oklahoma adjusted gro ss income shall be increased by
44234423 any amounts paid for motor vehicle excise taxe s which
44244424 were deducted as allowed by the Internal Revenue Code
44254425 of 1986, as amended.
44264426 f. For taxable years beginning on or after January 1,
44274427 2010, and ending on December 31, 2016, in the case of
44284428 individuals who use the standard deduction in
44294429 determining taxable income, there shall be added or
44304430 deducted, as the case may be, the difference necessary
44314431 to allow a standard deduction equal to the standard
44324432 deduction allowed by the Internal Reve nue Code of
44334433
44344434
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44844484 1986, as amended, based upon the amount and filing
44854485 status prescribed by such Code for purposes of filing
44864486 federal individual income tax returns.
44874487 g. For taxable years beginning on or after January 1,
44884488 2017 tax years 2017 through 2025 , in the case of
44894489 individuals who use the standard deduction in
44904490 determining taxable income, there shall be added or
44914491 deducted, as the case may be, the difference necessary
44924492 to allow a standard deduction in lieu of the standard
44934493 deduction allowed by the Internal Revenue Code of
44944494 1986, as amended, as follows:
44954495 (1) Six Thousand Three Hundred Fifty Dollars
44964496 ($6,350.00) for single or married filing
44974497 separately,
44984498 (2) Twelve Thousand Seven Hundred Dollars
44994499 ($12,700.00) for married filing jointly or
45004500 qualifying widower with dependent child , and
45014501 (3) Nine Thousand Three Hundred Fifty Dollars
45024502 ($9,350.00) for head of household.
45034503 h. For tax year 2025 and subsequent tax years, in the
45044504 case of individuals who use the standard deduction in
45054505 determining taxable income, there shall be added or
45064506 deducted, as the case may be, the difference necessary
45074507 to allow a standard deduction in lieu of the standard
45084508
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45594559 deduction allowed by the Internal Revenue Code of
45604560 1986, as amended, as follows:
45614561 (1) Fifteen Thousand Dollars ($15,000.00) for single
45624562 or married filing separ ately,
45634563 (2) Thirty Thousand Dollars ($30,000.00) for married
45644564 filing jointly or qualifying widower with
45654565 dependent child, and
45664566 (3) Twenty-two Thousand Five Hundred Dollars
45674567 ($22,500.00) for head of household.
45684568 3. a. In the case of resident and part -year resident
45694569 individuals having adjusted gross income from sources
45704570 both within and without the state, the itemized or
45714571 standard deductions and personal exemptions shall be
45724572 reduced to an amount which is the same portion of the
45734573 total thereof as Oklahoma adjusted gross in come is of
45744574 adjusted gross income. To the extent itemized
45754575 deductions include allowable moving expense, proration
45764576 of moving expense shall not be required or permitted
45774577 but allowable moving expense shall be fully deductible
45784578 for those taxpayers moving within o r into Oklahoma
45794579 this state and no part of moving expense shall be
45804580 deductible for those taxpayers moving without or out
45814581 of Oklahoma this state. All other itemized or
45824582
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46334633 standard deductions and personal exemptions shall be
46344634 subject to proration as provided by l aw.
46354635 b. For taxable years beginning on or after January 1,
46364636 2018, the net amount of itemized deductions allowable
46374637 on an Oklahoma income tax return, subject to the
46384638 provisions of paragraph 24 of this subsection, shall
46394639 not exceed Seventeen Thousand Dollars ($17 ,000.00).
46404640 For purposes of this subparagraph, charitable
46414641 contributions and med ical expenses deductible for
46424642 federal income tax purposes shall be excluded from the
46434643 amount of Seventeen Thousand Dollars ($17,000.00) as
46444644 specified by this subparagraph.
46454645 4. A resident individual with a physical disability
46464646 constituting a substantial handicap to employment may deduct from
46474647 Oklahoma adjusted gross income such expenditures to modify a motor
46484648 vehicle, home or workplace as are necessary to compensate for his or
46494649 her handicap. A veteran certified by the United States Department
46504650 of Veterans Affairs o f the federal government as having a service -
46514651 connected disability shall be conclusively presumed to be an
46524652 individual with a physical disability constituting a substantial
46534653 handicap to employment. The Tax Commission shall promulgate rules
46544654 containing a list of combinations of common disabilities and
46554655 modifications which may be presumed to qualify for this deduction.
46564656
46574657
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47074707 The Tax Commission shall prescribe necessary requirements for
47084708 verification.
47094709 5. a. Before July 1, 2010, the first One Thousand Five
47104710 Hundred Dollars ($1,500.00) received by any person
47114711 from the United States as salary or compensation in
47124712 any form, other than retirement benefits, as a member
47134713 of any component of the Armed Force s of the United
47144714 States shall be deducted from taxable income.
47154715 b. On or after July 1, 2010, one hundred percent (100%)
47164716 of the income received by any person from the United
47174717 States as salary or compensation in any form, other
47184718 than retirement benefits, as a me mber of any component
47194719 of the Armed Forces of the United States shall be
47204720 deducted from taxable income.
47214721 c. Whenever the filing of a timely income tax return by a
47224722 member of the Armed Forces of the United States is
47234723 made impracticable or impossible of accomplis hment by
47244724 reason of:
47254725 (1) absence from the United States, which term
47264726 includes only the states and the District of
47274727 Columbia,
47284728 (2) absence from the State of Oklahoma this state
47294729 while on active duty, or
47304730
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47814781 (3) confinement in a hospital within the United
47824782 States for treatment of wounds, injuries or
47834783 disease,
47844784 the time for filing a return and pay ing an income tax
47854785 shall be and is hereby extended without incurring
47864786 liability for interest or penalties, to the fifteenth
47874787 day of the third month following the month in which:
47884788 (a) Such individual shall return to the United
47894789 States if the extension is granted pursuant
47904790 to subparagraph a division 1 of this
47914791 paragraph subparagraph, return to the State
47924792 of Oklahoma this state if the extension is
47934793 granted pursuant to subparagraph b division
47944794 2 of this paragraph subparagraph or be
47954795 discharged from such hospital if the
47964796 extension is granted pursuant to
47974797 subparagraph c division 3 of this paragraph
47984798 subparagraph, or
47994799 (b) An executor, administrator, or conservator
48004800 of the estate of the taxpayer is appoin ted,
48014801 whichever event occurs the earliest.
48024802 Provided, that the Tax Commission may, in its discretion, grant
48034803 any member of the Armed Forces of the United States an extension of
48044804 time for filing of income tax returns and payment of income tax
48054805
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48564856 without incurring liabilities for interest or penalties. Such
48574857 extension may be granted only whe n in the judgment of the Tax
48584858 Commission a good cause exists therefor and may be for a period in
48594859 excess of six (6) months. A record of every such extension granted,
48604860 and the reason therefor, shall be kept.
48614861 6. Before July 1, 2010, the salary or any other form of
48624862 compensation, received from the United States by a member of any
48634863 component of the Armed Forces of the United States, shall be
48644864 deducted from taxable income during the time i n which the person is
48654865 detained by the enemy in a conflict, is a prisoner of wa r or is
48664866 missing in action and not deceased; provided, after July 1, 2010,
48674867 all such salary or compensation shall be subject to the deduction as
48684868 provided pursuant to paragraph 5 of this subsection.
48694869 7. a. An individual taxpayer, whether resident or
48704870 nonresident, may deduct an amount equal to the federal
48714871 income taxes paid by the taxpayer during the taxable
48724872 year.
48734873 b. Federal taxes as described in subparagraph a of this
48744874 paragraph shall be deductible by any individual
48754875 taxpayer, whether resident or nonresident, only to the
48764876 extent they relate to income subject to taxation
48774877 pursuant to the provisions of the Oklahoma Income Tax
48784878 Act. The maximum amount allowable in the preceding
48794879 paragraph 5 of this subsection shall be prorated on
48804880
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49314931 the ratio of the Oklahoma adjusted gross income to
49324932 federal adjusted gross income.
49334933 c. For the purpose of this paragraph, “federal income
49344934 taxes paid” shall mean federal income taxes, surtaxes
49354935 imposed on incomes or excess p rofits taxes, as though
49364936 the taxpayer was on the accrual basis. In determining
49374937 the amount of deduction for federal income taxes for
49384938 tax year 2001, the amount of the deduction shall not
49394939 be adjusted by the amount of any accelerated ten
49404940 percent (10%) tax rate bracket credit or advanced
49414941 refund of the credit received during the tax year
49424942 provided pursuant to the federal Economic Growth and
49434943 Tax Relief Reconciliation Act of 2001, P.L. No. 107 -
49444944 16, and the advanced refund of such credit shall not
49454945 be subject to taxati on.
49464946 d. The provisions of this paragraph shall apply to all
49474947 taxable years ending after December 31, 1978, and
49484948 beginning before January 1, 2006.
49494949 8. Retirement benefits not to exceed Five Thousand Five Hundred
49504950 Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five
49514951 Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand
49524952 Dollars ($10,000.00) for the 2006 tax year and all subsequent tax
49534953 years, which are received by an individual from the civil service of
49544954 the United States, the Oklahoma Public Employees Retirement System,
49554955
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50065006 the Teachers’ Retirement System of Oklahoma, the Oklahoma Law
50075007 Enforcement Retirement System, the Oklahoma Firefighters Pension and
50085008 Retirement System, the Oklahoma Police Pension and Retirement
50095009 System, the employee retirement sy stems created by counties pursuant
50105010 to Section 951 et seq. of Title 19 of the Oklahoma Statutes, the The
50115011 Uniform Retirement System for Justices and Judges, the Oklahoma
50125012 Wildlife Conservation Department Retirement Fund, the Oklahoma
50135013 Employment Security Commi ssion Retirement Plan, or the employee
50145014 retirement systems created by municipal ities pursuant to Section 48 -
50155015 101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt
50165016 from taxable income.
50175017 9. In taxable years beginning after December 3l, 1984, Social
50185018 Security benefits received by an individual shall be exempt from
50195019 taxable income, to the extent such benefits are included in the
50205020 federal adjusted gross income pursuant to the provisions of Section
50215021 86 of the Internal Revenue Code of 1986, as amended, 26 U.S.C.,
50225022 Section 86.
50235023 10. For taxable years beginning after December 31, 1994, lum p-
50245024 sum distributions from employer plans of deferred compensation,
50255025 which are not qualified plans within the meaning of Section 401(a)
50265026 of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section
50275027 401(a), and which are deposited in and accounted for within a
50285028 separate bank account or brokerage account in a financial
50295029 institution within this state, shall be excluded from taxable income
50305030
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50815081 in the same manner as a qualifying rollover contribution to an
50825082 individual retirement account within the meaning of Sectio n 408 of
50835083 the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section
50845084 408. Amounts withdrawn from such bank or brokerage account,
50855085 including any earnings thereon, shall be i ncluded in taxable income
50865086 when withdrawn in the same manner as withdrawals from individual
50875087 retirement accounts within the meaning of Section 408 of the
50885088 Internal Revenue Code of 1986, as amended.
50895089 11. In taxable years beginning after December 31, 1995,
50905090 contributions made to and interest received from a medical savings
50915091 account established pursuant to Sections 2621 through 2623 of Title
50925092 63 of the Oklahoma Statutes shall be exempt from taxable income.
50935093 12. For taxable years beginning after December 31, 1996, th e
50945094 Oklahoma adjusted gross income of any individual taxpayer who is a
50955095 swine or poultry producer may be further adjusted for the deduction
50965096 for depreciation allowed for new construction or expansion costs
50975097 which may be computed using the same depreciation meth od elected for
50985098 federal income tax purposes except that the useful life shall b e
50995099 seven (7) years for purposes of this paragraph. If depreciation is
51005100 allowed as a deduction in determining the adjusted gross income of
51015101 an individual, any depreciation calculate d and claimed pursuant to
51025102 this section shall in no event be a duplication of any depreciation
51035103 allowed or permitted on the federal income tax return of the
51045104 individual.
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51565156 13. a. In taxable years beginning before January 1, 2005,
51575157 retirement benefits not to exce ed the amounts
51585158 specified in this paragraph, which are received by an
51595159 individual sixty-five (65) years of age or older and
51605160 whose Oklahoma adjusted gross income is Twenty -five
51615161 Thousand Dollars ($25,000.00) or less if the filing
51625162 status is single, head of hous ehold, or married filing
51635163 separate, or Fifty Thousand Dollars ($50,000.00) or
51645164 less if the filing status is married filing joint or
51655165 qualifying widow, shall be exempt from taxable income.
51665166 In taxable years beginning after December 31, 2004,
51675167 retirement benefits not to exceed the amounts
51685168 specified in this paragraph, which are received by an
51695169 individual whose Oklahoma adjusted gross income is
51705170 less than the qualifying amount specified in this
51715171 paragraph, shall be exempt from taxable income.
51725172 b. For purposes of this p aragraph, the qualifying amount
51735173 shall be as follows:
51745174 (1) in taxable years beginning after December 31,
51755175 2004, and prior to January 1, 2007, the
51765176 qualifying amount shall be Thirty -seven Thousand
51775177 Five Hundred Dollars ($37,500.00) or less if the
51785178 filing status is single, head of household, or
51795179 married filing separate, or Seventy -five Thousand
51805180
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52315231 Dollars ($75,000.00) or less if the filing status
52325232 is married filing jointly or qualifying widow,
52335233 (2) in the taxable year beginning January 1, 2007,
52345234 the qualifying amount shal l be Fifty Thousand
52355235 Dollars ($50,000.00) or less if the filing status
52365236 is single, head of household, or married filing
52375237 separate, or One Hundred Thousand Dollars
52385238 ($100,000.00) or less if the filing status is
52395239 married filing jointly or qualifying widow,
52405240 (3) in the taxable year beginning January 1, 2008,
52415241 the qualifying amount shall be Si xty-two Thousand
52425242 Five Hundred Dollars ($62,500.00) or less if the
52435243 filing status is single, head of household, or
52445244 married filing separate, or One Hundred Twenty -
52455245 five Thousand Dollars ($125,000.00) or less if
52465246 the filing status is married filing jointly or
52475247 qualifying widow,
52485248 (4) in the taxable year beginning January 1, 2009,
52495249 the qualifying amount shall be One Hundred
52505250 Thousand Dollars ($100,000.00) or less if the
52515251 filing status is singl e, head of household, or
52525252 married filing separate, or Two Hundred Thousand
52535253 Dollars ($200,000.00) or less if the filing
52545254
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53055305 status is married filing jointly or qualifying
53065306 widow, and
53075307 (5) in the taxable year beginning January 1, 2010,
53085308 and subsequent taxable years, there shall be no
53095309 limitation upon the qualifying amount.
53105310 c. For purposes of this paragraph, “retirement benefits”
53115311 means the total distributions or withdrawals from the
53125312 following:
53135313 (1) an employee pension benefit plan which satisfies
53145314 the requirements of Sec tion 401 of the Internal
53155315 Revenue Code of 1986, as amended, 26 U.S.C.,
53165316 Section 401,
53175317 (2) an eligible deferred compensation plan that
53185318 satisfies the requirements of Section 457 of the
53195319 Internal Revenue Code of 1986, as amended, 26
53205320 U.S.C., Section 457,
53215321 (3) an individual retirement account, annuity or
53225322 trust or simplified employee pension that
53235323 satisfies the requirements of Section 408 of the
53245324 Internal Revenue Code of 1986, as amended, 26
53255325 U.S.C., Section 408,
53265326 (4) an employee annuity subject to the provisions of
53275327 Section 403(a) or (b) of the Internal Revenue
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53795379 Code of 1986, as amended, 26 U.S.C., Section
53805380 403(a) or (b),
53815381 (5) United States Retirement Bonds which satisfy the
53825382 requirements of Section 86 of the Internal
53835383 Revenue Code of 1986, as amended, 26 U.S.C.,
53845384 Section 86, or
53855385 (6) lump-sum distributions from a retirement plan
53865386 which satisfies the requirements of Section
53875387 402(e) of the Internal Revenue Code of 1986, as
53885388 amended, 26 U.S.C., Section 402(e).
53895389 d. The amount of the exemption provided by this paragraph
53905390 shall be limited to Five Thousand Five Hundred Dollars
53915391 ($5,500.00) for the 2004 tax year, Seven T housand Five
53925392 Hundred Dollars ($7,500.00) for the 2005 tax year and
53935393 Ten Thousand Dollars ($10,000.00) for the tax year
53945394 2006 and for all subsequent tax years. Any individual
53955395 who claims the exemption provided for in paragraph 8
53965396 of this subsection shall not be permitted to claim a
53975397 combined total exemption pursuant to this paragraph
53985398 and paragraph 8 of this subsection in an amount
53995399 exceeding Five Thousand Five Hundred Dollars
54005400 ($5,500.00) for the 2004 tax year, Seven Thousand Five
54015401 Hundred Dollars ($7,500.00) for t he 2005 tax year and
54025402
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54535453 Ten Thousand Dollars ($10,000.00) for the 2006 tax
54545454 year and all subsequent tax years.
54555455 14. In taxable years beginning after December 31, 1999, for an
54565456 individual engaged in production agriculture who has filed a
54575457 Schedule F form with the taxpayer ’s federal income tax return for
54585458 such taxable year, there shall be excluded from taxable income any
54595459 amount which was included as federal taxable income or federal
54605460 adjusted gross income and which consists of the discharge of an
54615461 obligation by a cred itor of the taxpayer incurred to finance the
54625462 production of agricultural products.
54635463 15. In taxable years beginning December 31, 2000, an amount
54645464 equal to one hundred percent (100%) of the amount of any scholarship
54655465 or stipend received from participation in the Oklahoma Police Corps
54665466 Program, as established in Section 2 -140.3 of Title 47 of the
54675467 Oklahoma Statutes shall be exempt from taxable income.
54685468 16. a. In taxable years beginning aft er December 31, 2001,
54695469 and before January 1, 2005, there shall be allowed a
54705470 deduction in the amount of contributions to accounts
54715471 established pursuant to the Oklahoma College Savings
54725472 Plan Act. The deduction shall equal the amount of
54735473 contributions to account s, but in no event shall the
54745474 deduction for each contributor exceed Two Thousand
54755475 Five Hundred Dollars ($2,500.00) each taxable year for
54765476 each account.
54775477
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55285528 b. In taxable years beginning after December 31, 2004,
55295529 each taxpayer shall be allowed a deduction for
55305530 contributions to accounts established pursuant to the
55315531 Oklahoma College Savings Plan Act. The maximum annual
55325532 deduction shall equal the amount of contributions to
55335533 all such accounts plus any contributions to such
55345534 accounts by the taxpayer for prior taxable years a fter
55355535 December 31, 2004, which were not deducted, but in no
55365536 event shall the deduction for each tax year exceed Ten
55375537 Thousand Dollars ($10,000.00) for each individual
55385538 taxpayer or Twenty Thousand Dollars ($20,000.00) for
55395539 taxpayers filing a joint return. Any a mount of a
55405540 contribution that is not deducted by the taxpayer in
55415541 the year for which the contribution is made may be
55425542 carried forward as a deduction from income for the
55435543 succeeding five (5) years. For taxable years
55445544 beginning after December 31, 2005, deduction s may be
55455545 taken for contributions and rollovers made during a
55465546 taxable year and up to April 15 of the succeeding
55475547 year, or the due date of a taxpayer ’s state income tax
55485548 return, excluding extensions, whichever is later.
55495549 Provided, a deduction for the same cont ribution may
55505550 not be taken for two (2) different taxable years.
55515551
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56025602 c. In taxable years beginning after December 31, 2006,
56035603 deductions for contributions made pursuant to
56045604 subparagraph b of this paragraph shall be limited as
56055605 follows:
56065606 (1) for a taxpayer who qualifi ed for the five-year
56075607 carryforward election and who takes a rollover or
56085608 nonqualified withdrawal during that period, the
56095609 tax deduction otherwise available pursuant to
56105610 subparagraph b of this paragraph shall be reduced
56115611 by the amount which is equal to the rollo ver or
56125612 nonqualified withdrawal, and
56135613 (2) for a taxpayer who elects to take a ro llover or
56145614 nonqualified withdrawal within the same tax year
56155615 in which a contribution was made to the
56165616 taxpayer’s account, the tax deduction otherwise
56175617 available pursuant to subparagr aph b of this
56185618 paragraph shall be reduced by the amount of the
56195619 contribution which is equal to the rollover or
56205620 nonqualified withdrawal.
56215621 d. If a taxpayer elects to take a rollover on a
56225622 contribution for which a deduction has been taken
56235623 pursuant to subparagraph b of this paragraph within
56245624 one (1) year of the date of contribution, the amou nt
56255625 of such rollover shall be included in the adjusted
56265626
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56775677 gross income of the taxpayer in the taxable year of
56785678 the rollover.
56795679 e. If a taxpayer makes a nonqualified withdrawal of
56805680 contributions for which a deduction was taken pursuant
56815681 to subparagraph b of this paragraph, such nonqualified
56825682 withdrawal and any earnings thereon shall be included
56835683 in the adjusted gross income of the taxpayer in the
56845684 taxable year of the nonqualified withdrawal.
56855685 f. As used in this paragraph:
56865686 (1) “non-qualified withdrawal” means a withdrawal
56875687 from an Oklahoma College Savings Plan account
56885688 other than one of the following:
56895689 (a) a qualified withdrawal,
56905690 (b) a withdrawal made as a result of the death
56915691 or disability of the de signated beneficiary
56925692 of an account,
56935693 (c) a withdrawal that is made on the account of
56945694 a scholarship or the allowance or payment
56955695 described in Section 135(d)(1)(B) or (C) or
56965696 by the Internal Revenue Code of 1986, as
56975697 amended, received by the designated
56985698 beneficiary to the extent the amount of the
56995699 refund does not exceed the amount of the
57005700 scholarship, allowance, or payment, or
57015701
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57525752 (d) a rollover or change of designated
57535753 beneficiary as permitted by subsection F of
57545754 Section 3970.7 of Title 70 of the Oklahoma
57555755 Statutes, and
57565756 (2) “rollover” means the transfer of funds from the
57575757 Oklahoma College Savings Plan to any other plan
57585758 under Section 529 of the Internal Revenue Code of
57595759 1986, as amended.
57605760 17. For tax years 2006 through 2021, retirement benefits
57615761 received by an individual from any component of the Armed Forces of
57625762 the United States in an amount not to exc eed the greater of seventy -
57635763 five percent (75%) of such benefits or Ten Thousand Dollars
57645764 ($10,000.00) shall be exempt from taxable income but in no case less
57655765 than the amount of the exemption provided by paragraph 13 of this
57665766 subsection. For tax year 2022 and subsequent tax years, retirement
57675767 benefits received by an individual from any component of the Armed
57685768 Forces of the United States shall be exempt from taxable income.
57695769 18. For taxable years beginning after December 31, 2006,
57705770 retirement benefits received by federal civil service retirees,
57715771 including survivor annuities, paid in lieu of Social Security
57725772 benefits shall be exempt from taxable income to the extent such
57735773 benefits are include d in the federal adjusted gross income pursuant
57745774 to the provisions of Section 86 of the Internal Revenue Code of
57755775
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58265826 1986, as amended, 26 U.S.C., Section 86, according to the following
58275827 schedule:
58285828 a. in the taxable year beginning January 1, 2007, twenty
58295829 percent (20%) of such benefits shall be exempt,
58305830 b. in the taxable year beginning Januar y 1, 2008, forty
58315831 percent (40%) of such benefits shall be exempt,
58325832 c. in the taxable year beginning January 1, 2009, sixty
58335833 percent (60%) of such benefits shall be exempt,
58345834 d. in the taxable year beginning January 1, 2010, eighty
58355835 percent (80%) of such benefits shall be exempt, and
58365836 e. in the taxable year beginning January 1, 2011, and
58375837 subsequent taxable years, one hundred percent (100%)
58385838 of such benefits shall be exempt.
58395839 19. a. For taxable years beginning after December 31, 2007, a
58405840 resident individual may deduct up to Ten Thousand
58415841 Dollars ($10,000.00) from Oklahoma adjusted gross
58425842 income if the individual, or the dependent of the
58435843 individual, while living, donates one or more human
58445844 organs of the individual to another human being for
58455845 human organ transplantation. As used in this
58465846 paragraph, “human organ” means all or part of a liver,
58475847 pancreas, kidney, intestine, lung, or bone marrow. A
58485848 deduction that is claimed under this paragraph may be
58495849
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59005900 claimed in the taxable year in which the human organ
59015901 transplantation occurs.
59025902 b. An individual may claim this deduction only once, and
59035903 the deduction may be claimed only for unreimbursed
59045904 expenses that are incurred by the individual and
59055905 related to the organ don ation of the individual.
59065906 c. The Oklahoma Tax Commission shall promulgate rules to
59075907 implement the provisions of this paragraph which shall
59085908 contain a specific list of expenses which may be
59095909 presumed to qualify for the deduction. The Tax
59105910 Commission shall presc ribe necessary requirements for
59115911 verification.
59125912 20. For taxable years beginning after December 31, 2009, there
59135913 shall be exempt from taxable income any amount received by the
59145914 beneficiary of the death benefit for an emergency medical technician
59155915 or a registered emergency medical responder provided by Section 1 -
59165916 2505.1 of Title 63 of the Oklahoma Statutes.
59175917 21. For taxable years beginning after December 31, 2008,
59185918 taxable income shall be increased by any unemployment compensation
59195919 exempted under Section 85(c) of th e Internal Revenue Code of 1986,
59205920 as amended, 26 U.S.C., Section 85(c) (2009).
59215921 22. For taxable years beginning after December 31, 2008, there
59225922 shall be exempt from taxable income any payment in an amount less
59235923 than Six Hundred Dollars ($600.00) received by a person as an award
59245924
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59755975 for participation in a competitive livestock show event. For
59765976 purposes of this paragraph, the payment shall be treated as a
59775977 scholarship amount paid by the entity sponsoring the event and the
59785978 sponsoring entity shall cause the payment to b e categorized as a
59795979 scholarship in its books and records.
59805980 23. For taxable year s beginning on or after January 1, 2016,
59815981 taxable income shall be increased by any amount of state and local
59825982 sales or income taxes deducted under 26 U.S.C., Section 164 of the
59835983 Internal Revenue Code of 1986, as amended. If the amount of state
59845984 and local taxes deducted on the federal return is limited, taxable
59855985 income on the state return shall be increased only by the amount
59865986 actually deducted after any such limitations are applied.
59875987 24. For taxable years beginning after December 31, 2020, each
59885988 taxpayer shall be allowed a deduction for contributions to accounts
59895989 established pursuant to the Achieving a Better Life Experience
59905990 (ABLE) Program program as established in Section 4001.1 et seq. of
59915991 Title 56 of the Oklahoma Statutes. For any tax year, the deduction
59925992 provided for in this paragraph shall not exceed Ten Thousand Dollars
59935993 ($10,000.00) for an individual taxpayer or Twenty Thousand Dollars
59945994 ($20,000.00) for taxpayers filing a joint return. Any amount of
59955995 contribution not deducted by the taxpayer in the tax year for which
59965996 the contribution is made may be carried forward as a deduction from
59975997 income for up to five (5) tax years. Deductions may be taken for
59985998 contributions made during the tax year and through April 15 of the
59995999
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60506050 succeeding tax year, or through the due date of a taxpayer ’s state
60516051 income tax return excluding extensions, whichever is later.
60526052 Provided, a deduction for the same contribution may not be taken in
60536053 more than one (1) tax year.
60546054 F. 1. For taxable years beginning after December 31, 2004, a
60556055 deduction of one hundred percent (100%) of the amount for tax years
60566056 2005 through 2024 and, for tax year 2025 and subsequent tax years,
60576057 fifty percent (50%) of the amount from the Oklahoma adjusted gross
60586058 income of any individual taxpayer shall be allowed for qualifying
60596059 gains receiving capital treatment that are included in the federal
60606060 adjusted gross income of such individual taxpayer during the taxable
60616061 year.
60626062 2. As used in this subsection:
60636063 a. “qualifying gains receiving capital treatment ” means
60646064 the amount of net capital gains, as defined in Section
60656065 1222(11) of the Internal Revenue Code of 1986, as
60666066 amended, included in an individual taxpayer ’s federal
60676067 income tax return that result from:
60686068 (1) the sale of real property or tangible personal
60696069 property located within Oklahoma this state that
60706070 has been directly or indirectly owned by the
60716071 individual taxpayer for a holding period of at
60726072 least five (5) years prior to the date of the
60736073
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61246124 transaction from which such net c apital gains
61256125 arise,
61266126 (2) the sale of stock or the sale of a direct or
61276127 indirect ownership interest in an Oklahoma
61286128 company, limited liability company, or
61296129 partnership where such stock or ownership
61306130 interest has been directly or indirectly owned by
61316131 the individual taxpayer for a holding period of
61326132 at least two (2) years prior to the date of the
61336133 transaction from which the net capital gains
61346134 arise, or
61356135 (3) the sale of real property, tangible personal
61366136 property or intangible personal property located
61376137 within Oklahoma this state as part of the sale of
61386138 all or substantially all of the assets of an
61396139 Oklahoma company, limited liability company, or
61406140 partnership or an Oklahoma proprietorship
61416141 business enterprise where such property has been
61426142 directly or indirectly owned by such entit y or
61436143 business enterprise or owned by the owners of
61446144 such entity or business enterprise for a period
61456145 of at least two (2) years prior to the date of
61466146 the transaction from which the net capital gains
61476147 arise,
61486148
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61996199 b. “holding period” means an uninterrupted period of
62006200 time. The holding period shall include any additional
62016201 period when the property was held by another
62026202 individual or entity, if such additional period is
62036203 included in the taxpayer ’s holding period for the
62046204 asset pursuant to the Internal Revenue Code of 1986,
62056205 as amended,
62066206 c. “Oklahoma company,” “limited liability company, ” or
62076207 “partnership” means an entity whose primary
62086208 headquarters have been located in Oklahoma this state
62096209 for at least three (3) uninterrupted years prior to
62106210 the date of the transaction from which the net capital
62116211 gains arise,
62126212 d. “direct” means the individual taxpayer directly o wns
62136213 the asset,
62146214 e. “indirect” means the individual taxpayer owns an
62156215 interest in a pass-through entity (or chain of pass -
62166216 through entities) that sells the asset that gives rise
62176217 to the qualifying gains receiving capital treatment.
62186218 (1) With respect to sales of real property or
62196219 tangible personal property located within
62206220 Oklahoma this state, the deduction described in
62216221 this subsection shall not apply unless the pass -
62226222 through entity that mak es the sale has held the
62236223
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62746274 property for not less than five (5) uninterrupted
62756275 years prior to the date of the transaction that
62766276 created the capital gain, and each pass -through
62776277 entity included in the chain of ownership has
62786278 been a member, partner, or shareholder of the
62796279 pass-through entity in the tier immediately below
62806280 it for an uninterrupted period of not less than
62816281 five (5) years.
62826282 (2) With respect to sales of stock or ownership
62836283 interest in or sales of all or substantially all
62846284 of the assets of an Oklahoma company, limited
62856285 liability company, partnership or Oklahoma
62866286 proprietorship business ent erprise, the deduction
62876287 described in this subsection shall not apply
62886288 unless the pass-through entity that makes the
62896289 sale has held the stock or ownership interest for
62906290 not less than two (2) uninterrupted years prior
62916291 to the date of the transaction that created the
62926292 capital gain, and each pass -through entity
62936293 included in the chain of ownership has been a
62946294 member, partner or shareholder of the pass -
62956295 through entity in the tier immediately bel ow it
62966296 for an uninterrupted period of not less than two
62976297 (2) years. For purpose s of this division,
62986298
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63496349 uninterrupted ownership prior to July 1, 2007,
63506350 shall be included in the determination of the
63516351 required holding period prescribed by this
63526352 division, and
63536353 f. “Oklahoma proprietorship business enterprise ” means a
63546354 business enterprise whose income and expenses have
63556355 been reported on Schedule C or F of an individual
63566356 taxpayer’s federal income tax return, or any similar
63576357 successor schedule published by the Internal Revenue
63586358 Service and whose primary headquarters have been
63596359 located in Oklahoma this state for at least three (3)
63606360 uninterrupted years prior to the date of the
63616361 transaction from which the net capital gains arise.
63626362 G. 1. For purposes of computing its Oklahoma taxable i ncome
63636363 under this section, the dividends -paid deduction otherwise allowed
63646364 by federal law in computing net income of a real estate investment
63656365 trust that is subject to federal income tax shall be added back in
63666366 computing the tax imposed by this state under thi s title if the real
63676367 estate investment trust is a captive real estate investmen t trust.
63686368 2. For purposes of computing its Oklahoma taxable income under
63696369 this section, a taxpayer shall add back otherwise deductible rents
63706370 and interest expenses paid to a captiv e real estate investment trust
63716371 that is not subject to the provisions of paragraph 1 of this
63726372 subsection. As used in this subsection:
63736373
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64246424 a. the term “real estate investment trust ” or “REIT”
64256425 means the meaning ascribed to such term in Section 856
64266426 of the Internal Revenue Code of 1986, as amended,
64276427 b. the term “captive real estate investment trust” means
64286428 a real estate investment trust, the shares or
64296429 beneficial interests of which are not regularly traded
64306430 on an established securities market and more than
64316431 fifty percent (50%) of the voting power or value of
64326432 the beneficial interests or shares of which are owned
64336433 or controlled, directly or indirectly, or
64346434 constructively, by a single entity that is:
64356435 (1) treated as an association taxable as a
64366436 corporation under the Internal Rev enue Code of
64376437 1986, as amended, and
64386438 (2) not exempt from federal income tax purs uant to
64396439 the provisions of Section 501(a) of the Internal
64406440 Revenue Code of 1986, as amended.
64416441 The term shall not include a real estate investment
64426442 trust that is intended to be regula rly traded on an
64436443 established securities market, and that satisfies the
64446444 requirements of Section 856(a)(5) and (6) of the U.S.
64456445 Internal Revenue Code of 1986, as amended, by reason
64466446 of Section 856(h)(2) of the Internal Revenue Code of
64476447 1986, as amended,
64486448
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64996499 c. the term “association taxable as a corporation ” shall
65006500 not include the following en tities:
65016501 (1) any real estate investment trust as defined in
65026502 paragraph a of this subsection other than a
65036503 “captive real estate investment trust ” captive
65046504 real estate investment trust ,
65056505 (2) any qualified real estate investment trust
65066506 subsidiary under Section 856(i) of the Internal
65076507 Revenue Code of 1986, as amended, other than a
65086508 qualified REIT subsidiary of a “captive real
65096509 estate investment trust ” captive real estate
65106510 investment trust,
65116511 (3) any Listed Australian Property Trust listed
65126512 Australian property trust (meaning an Australian
65136513 unit trust registered as a “Managed Investment
65146514 Scheme” “managed investment scheme ” under the
65156515 Australian Corporations Act 2001 in which the
65166516 principal class of units is listed on a
65176517 recognized stock exchange in Australia and is
65186518 regularly traded on an established securities
65196519 market), or an entity organized as a trust,
65206520 provided that a Listed Australian Property Trust
65216521 listed Australian property trust owns or
65226522 controls, directly or indirectly, seventy -five
65236523
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65746574 percent (75%) or more of the voting power or
65756575 value of the beneficial interests or shares of
65766576 such trust, or
65776577 (4) any Qualified Foreign Entity qualified foreign
65786578 entity, meaning a corporation, trust, association
65796579 or partnership organized outside the laws of the
65806580 United States and which satisfies the following
65816581 criteria:
65826582 (a) at least seventy-five percent (75%) of the
65836583 entity’s total asset value at the close of
65846584 its taxable year is represented by real
65856585 estate assets, as defined in Secti on
65866586 856(c)(5)(B) of the Internal Revenue Code of
65876587 1986, as amended, thereby including shares
65886588 or certificates of beneficial interest in
65896589 any real estate investment trust, cash and
65906590 cash equivalents, and U.S. Government
65916591 securities,
65926592 (b) the entity receives a divi dend-paid
65936593 deduction comparable to Section 561 of the
65946594 Internal Revenue Code of 1986, as amended,
65956595 or is exempt from entity level tax,
65966596 (c) the entity is required to distribute at
65976597 least eighty-five percent (85%) of its
65986598
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66496649 taxable income, as computed in the
66506650 jurisdiction in which it is organized, to
66516651 the holders of its shares or certificates of
66526652 beneficial interest on an annual basis,
66536653 (d) not more than ten percent (10%) of the
66546654 voting power or value in such entity is held
66556655 directly or indirectly or constructively by
66566656 a single entity or individual, or the shares
66576657 or beneficial interests of such entity are
66586658 regularly traded on an established
66596659 securities market, and
66606660 (e) the entity is organized in a country which
66616661 has a tax treaty with the United States.
66626662 3. For purposes of this subsection, the constructive ownership
66636663 rules of Section 318(a) of the Internal Revenue Code, as modified by
66646664 Section 856(d)(5) of the Internal Revenue Code of 1986, as amended,
66656665 shall apply in determining the ownership of stock, assets, or net
66666666 profits of any person.
66676667 4. A real estate investment trust that does not become
66686668 regularly traded on an established securities market within one (1)
66696669 year of the date on which it first becomes a real estate investment
66706670 trust shall be deemed not to have been regularly traded on an
66716671 established securities market, retroactive to the date it first
66726672 became a real estate investment trust, and shall file an amended
66736673
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67246724 return reflecting such retroactive designation for any tax year or
67256725 part year occurring during its initial year of status as a real
67266726 estate investment trust. For purposes of this subsection, a real
67276727 estate investment trust becomes a real estate investment trust on
67286728 the first day it has both met the requirements of Section 856 of the
67296729 Internal Revenue Code of 1986, as amended, and has elected to be
67306730 treated as a real estate investment trust pursuant to Sec tion
67316731 856(c)(1) of the Internal Revenue Code of 1986, as amended.
67326732 SECTION 7. AMENDATORY 68 O.S. 2021, Section 5011, is
67336733 amended to read as follows:
67346734 Section 5011. A. Except as otherwise provided by this section,
67356735 beginning with the calendar year 1990 and for each calendar year
67366736 through 1998, and for calendar year 2003, any individual who is a
67376737 resident of and is domiciled in this state during the entire
67386738 calendar year for which the filing is made and whose gross household
67396739 income for such year does not exceed Twelve Thousand Dollars
67406740 ($12,000.00) may file a claim for sales tax relief.
67416741 B. For calendar years 1999, 2002 , and 2004, any individual who
67426742 is a resident of and is domiciled in this state during the entire
67436743 calendar year for which the filing is made may file a claim for
67446744 sales tax relief if the gross household income for such year does
67456745 not exceed the following amounts:
67466746 1. For an individual not subject to the provisions of paragraph
67476747 2 of this subsection and claiming no allowable persona l exemption
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67996799 other than the allowable personal exemption for that individual or
68006800 the spouse of that individual, Fifteen Thousand Dollars
68016801 ($15,000.00); or
68026802 2. For an individual clai ming one or more allowable personal
68036803 exemptions other than the allowable personal exemption for that
68046804 individual or the spouse of that individual, an individual with a
68056805 physical disability constituting a substantial handicap disability
68066806 to employment, or an in dividual who is sixty -five (65) years of age
68076807 or older at the close of the tax year, Thirty Thousand Dollars
68086808 ($30,000.00).
68096809 C. For calendar years 2000, 2001, 2005 and following and 2005
68106810 through 2024, an individual who is a resident of and is domiciled in
68116811 this state during the entire calendar year for which the filing is
68126812 made may file a claim for sales tax relief if the gross household
68136813 income for such year does not exceed the following amounts:
68146814 1. For an individual not subject to the provisions of paragraph
68156815 2 of this subsection and claiming no allowable personal exemption
68166816 other than the allowable personal exemption for that individual or
68176817 the spouse of that individual, Twenty Thousand Dollars ($20,000.00);
68186818 or
68196819 2. For an individual claiming one or more allowabl e personal
68206820 exemptions other than the allowable personal exemption for that
68216821 individual or the spouse of that individual, an individual with a
68226822 physical disability constituting a substantial handicap disability
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68746874 to employment, or an individual who is sixty -five (65) years of age
68756875 or older at the close of the tax year, Fifty Thousand Doll ars
68766876 ($50,000.00).
68776877 D. The For calendar year 2024 and previous calendar years, the
68786878 amount of the claim filed pursuant to the Sales Tax Relief Act shall
68796879 be Forty Dollars ($40.00) m ultiplied by the number of allowable
68806880 personal exemptions. No claims for sales tax relief shall be filed
68816881 for calendar year 2025 and subsequent calendar years. As used in
68826882 the Sales Tax Relief Act, “allowable personal exemption ” means a
68836883 personal exemption t o which the taxpayer would be entitled pursuant
68846884 to the provisions of the Oklah oma Income Tax Act, except for:
68856885 1. The exemptions such taxpayer would be entitled to pursuant
68866886 to Section 2358 of this title if such taxpayer or spouse is blind or
68876887 sixty-five (65) years of age or older at the close of the tax year;
68886888 2. An exemption for a person convicted of a felony if during
68896889 all or any part of the calendar year for which the claim is filed
68906890 such person was an inmate in the custody of the Department of
68916891 Corrections; or
68926892 3. An exemption for a person if during all or any part of the
68936893 calendar year for which the claim is filed such person resided
68946894 outside of this state.
68956895 E. A person convicted of a felony shall not be permitted to
68966896 file a claim for sales tax relief pursuant to the provisions of
68976897 Sections 5010 through 5016 of this title for the period of time
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69496949 during which the person is an inmate in the custody of the
69506950 Department of Corrections. Such period of time shall include the
69516951 entire calendar year if the person is in the custody of the
69526952 Department of Corrections during any part of the calendar year. The
69536953 provisions of this subsection shall not prohibit all other members
69546954 of the household of an inmate from filing a claim based upon the
69556955 personal exemptions to which the househo ld members would be entitled
69566956 pursuant to the provisions of the Oklahoma Income Tax Act.
69576957 F. The Department of Corrections shall withhold up to fifty
69586958 percent (50%) of any money inmates receive for claims made pursuant
69596959 to the Sales Tax Relief Act prior to Se ptember 1, 1991, for costs of
69606960 incarceration.
69616961 G. For purposes of Section 139.1 05 of Title 17 of the Oklahoma
69626962 Statutes, the gross household income of any individual who may file
69636963 a claim for sales tax relief shall not exceed Twelve Thousand
69646964 Dollars ($12,000.00).
69656965 SECTION 8. This act shall become effective July 1, 2025.
69666966 SECTION 9. It being immediately necessary for the preservation
69676967 of the public peace, health or safety, an emergency is hereby
69686968 declared to exist, by reason whereo f this act shall take effect and
69696969 be in full force from and after its passage a nd approval.
69706970
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