Oklahoma Senate Bill SB312 Introduced / Bill

                     
 
 
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STATE OF OKLAHOMA 
 
1st Session of the 60th Legislature (2025) 
 
SENATE BILL 312 	By: Jett 
 
 
 
 
 
AS INTRODUCED 
 
An Act relating to income tax; amending 68 O.S. 2021, 
Section 2358, as last amended by Section 155, Chapter 
452, O.S.L. 2024 (68 O.S. Supp. 2024, Section 2358), 
which relates to adjustments; modifying amount of 
personal exemption for certain tax years; modifying 
amount of standard deduction for certain taxpayers 
for certain tax years; providing exemption from 
taxable income for women claiming certain amount of 
dependents; providing exemption from taxable income 
for taxpayers of certain age; updating statutory 
references; updating statutory language; and 
providing an effective date . 
 
 
 
 
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHO MA: 
SECTION 1.     AMENDATORY     68 O.S. 2021, Section 2358, as 
last amended by Section 155, Chapter 452, O.S.L. 2024 (68 O.S. Supp. 
2024, Section 2358), is amended to read as follows: 
Section 2358.  For all tax years beginning after Dec ember 31, 
1981, taxable income and adjusted gross income shall be adjusted to 
arrive at Oklahoma taxable income and Oklahoma adjusted gross income 
as required by this section.   
 
 
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A.  The taxable income of any taxpayer shall be adjusted to 
arrive at Oklahoma t axable income for corporations and Oklahoma 
adjusted gross income for individuals, as follows: 
1.  There shall be added interest income on obligations of any 
state or political subdivision thereto which is not otherwise 
exempted pursuant to other laws of t his state, to the extent that 
such interest is not included in taxable income and adjusted gross 
income. 
2.  There shall be deducted amounts included in such income that 
the state is prohibited from taxing because of the provisions of the 
Federal United States Constitution, the State Oklahoma Constitution, 
federal laws or laws of Oklahoma. 
3.  The amount of any federal net operating loss deduction shall 
be adjusted as follows: 
a. For carryovers and carrybacks to taxable years 
beginning before January 1, 198 1, the amount of any 
net operating loss deduction allowed to a taxpayer for 
federal income tax purposes shall be reduced to an 
amount which is the same portion thereof as the loss 
from sources within this state, as determined pursuant 
to this section and S ection 2362 of this title, for 
the taxable year in which such loss is sustained is of 
the total loss for such year;   
 
 
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b. For carryovers and carrybacks to taxable years 
beginning after December 31, 1980, the amount of any 
net operating loss deduction allowed for the taxable 
year shall be an amount equal to the aggregate of the 
Oklahoma net operating loss carryovers and carrybacks 
to such year.  Oklahoma net operating losses shall be 
separately determined by reference to Section 172 of 
the Internal Revenue Code of 1986, as amended, 26 
U.S.C., Section 172, as modified by the Oklahoma 
Income Tax Act, Section 2351 et seq. of this title, 
and shall be allowed without regard to the existence 
of a federal net operating loss.  For tax years 
beginning after December 31, 2000, and ending before 
January 1, 2008, the years to which such losses may be 
carried shall be determined solely by reference to 
Section 172 of the Internal Revenue Code of 1986, as 
amended, 26 U.S.C., Section 172, with the exception 
that the terms “net operating loss” and “taxable 
income” shall be replaced with “Oklahoma net operating 
loss” and “Oklahoma taxable income ”.  For tax years 
beginning after December 31, 2007, and ending before 
January 1, 2009, years to which such losses may be 
carried back shall be limited to two (2) years.  For 
tax years beginning after December 31, 200 8, the years   
 
 
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to which such losses may be carried back shall be 
determined solely by reference to Section 172 of the 
Internal Revenue Code of 1986, as amended, 26 U.S.C., 
Section 172, with the exception that the terms “net 
operating loss” and “taxable income” shall be replaced 
with “Oklahoma net operating loss ” and “Oklahoma 
taxable income”. 
4.  Items of the following nature shall be allocated as 
indicated.  Allowable deductions at tributable to items separately 
allocable in subparagraphs a, b and c of this p aragraph, whether or 
not such items of income were actually received, shall be allocated 
on the same basis as those items: 
a. Income from real and tangible personal property, suc h 
as rents, oil and mining production or royalties, and 
gains or losses from sales of such property, shall be 
allocated in accordance with the situs of such 
property; 
b. Income from intangible personal property, such as 
interest, dividends, patent or copyr ight royalties, 
and gains or losses from sales of such property, shall 
be allocated in accordance with the domiciliary situs 
of the taxpayer, except that: 
(1) where such property has acquired a nonunitary 
business or commercial situs apart from the   
 
 
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domicile of the taxpayer such income shall be 
allocated in accordance with such business or 
commercial situs; interest income from 
investments held to generate working capital for 
a unitary business enterprise shall be included 
in apportionable income; a resident trust or 
resident estate shall be treated as having a 
separate commercial or business situs insofar as 
undistributed income is concerned, but shall not 
be treated as having a separate commercial or 
business situs insofar as distributed income is 
concerned, 
(2) for taxable years beginning after December 31, 
2003, capital or ordinary gains or losses from 
the sale of an ownership interest in a publicly 
traded partnership, as defined by Section 7704(b) 
of the Internal Revenue Code of 1986, as amended, 
shall be allocated to this state in the ratio of 
the original cost of such partnership ’s tangible 
property in this state to the original cost of 
such partnership’s tangible property everywhere, 
as determined at the time of the sale; if more 
than fifty percent (50% ) of the value of the 
partnership’s assets consists of intangible   
 
 
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assets, capital or ordinary gains or losses from 
the sale of an ownership interest in the 
partnership shall be allocated to this state in 
accordance with the sales factor of the 
partnership for its first full tax period 
immediately preceding its tax period during whic h 
the ownership interest in the partnership was 
sold; the provisions of this division shall only 
apply if the capital or ordinary gains or losses 
from the sale of an ownership in terest in a 
partnership do not constitute qualifying gain 
receiving capital treatment as defined in 
subparagraph a of paragraph 2 of subsection F of 
this section, 
(3) income from such property which is required to be 
allocated pursuant to the provisions of paragraph 
5 of this subsection shall be allocated as herein 
provided; 
c. Net income or loss from a business activity which is 
not a part of business carried on within or without 
the state of a unitary character shall be separately 
allocated to the state i n which such activity is 
conducted;   
 
 
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d. In the case of a manufacturing or processing 
enterprise the business of which in Oklahoma this 
state consists solely of marketing its products by: 
(1) sales having a situs without this state, shipped 
directly to a point from without the state to a 
purchaser within the state, commonly known as 
interstate sales, 
(2) sales of the product stored in public warehouses 
within the state pursuant to “in transit” 
tariffs, as prescribed and allowed by the 
Interstate Commerce Comm ission, to a purchaser 
within the state, 
(3) sales of the product stored in public warehouses 
within the state where the shipment to such 
warehouses is not covered by “in transit” 
tariffs, as prescribed and allowed by the 
Interstate Commerce Commission, to a purchaser 
within or without the state, 
the Oklahoma net income shall, at th e option of the 
taxpayer, be that portion of the total net income of 
the taxpayer for federal income tax purposes derived 
from the manufacture and/or processing and sales 
everywhere as determined by the ratio of the sales 
defined in this section made to the purchaser within   
 
 
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the state to the total sales everywhere.  The term 
“public warehouse” as used in this subparagraph means 
a licensed public warehouse, the principal business of 
which is warehousing merchandise for the public; 
e. In the case of insurance companies, Oklahoma taxable 
income shall be taxable income of the taxpayer for 
federal tax purposes, as adjusted for the adjustments 
provided pursuant to the provisions of paragr aphs 1 
and 2 of this subsection, apportioned as follows: 
(1) except as otherwise provided by division (2) of 
this subparagraph, taxable income of an insurance 
company for a taxable year shall be apportioned 
to this state by multiplying such income by a 
fraction, the numerator of which is the direct 
premiums written for insurance on property or 
risks in this state, and the denominator of which 
is the direct premiums written for insurance on 
property or risks everywhere.  For purposes of 
this subsection, the term “direct premiums 
written” means the total amount of direct 
premiums written, assessments and annuity 
considerations as reported for the taxable year 
on the annual statement filed by the company with 
the Insurance Commissioner in the form approved   
 
 
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by the National Association of Insurance 
Commissioners, or such other form as may be 
prescribed in lieu thereof, 
(2) if the principal source of premiums written by an 
insurance company consists of premiums for 
reinsurance accepted by it, the taxable income of 
such company shall be apportioned to this state 
by multiplying such income by a fraction, the 
numerator of which is the sum of (a) direct 
premiums written for insurance on property or 
risks in this state, plus (b) premiums written 
for reinsurance accepted in respect of property 
or risks in this state, and the denominator of 
which is the sum of (c) direct premiums written 
for insurance on property or risks everywhere, 
plus (d) premiums written for reinsurance 
accepted in respect of property or risks 
everywhere.  For purposes of this paragraph, 
premiums written for reinsurance accepted in 
respect of property or risks in this state, 
whether or not otherwise determinable, may at the 
election of the company be determined on the 
basis of the proportion which premi ums written 
for insurance accepted from companies   
 
 
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commercially domiciled in Oklahoma this state 
bears to premiums written for reinsurance 
accepted from all sources, or alternatively in 
the proportion which the sum of the direct 
premiums written for insuran ce on property or 
risks in this state by each ceding company from 
which reinsurance is accepted bears to the sum of 
the total direct premiums written by each such 
ceding company for the taxable year. 
5.  The net income or loss remaining after the separate 
allocation in paragraph 4 of this subsection, being that which is 
derived from a unitary business enterprise, shall be apportioned to 
this state on the basis of the arithmetical average of three factors 
consisting of property, payroll and sales or gross re venue 
enumerated as subparagraphs a, b and c of this paragraph.  Net 
income or loss as used in this paragraph includes that derived from 
patent or copyright royalties, purchase discounts, and interest on 
accounts receivable relating to or arising from a bu siness activity, 
the income from which is apportioned pursuant to this subsect ion, 
including the sale or other disposition of such property and any 
other property used in the unitary enterprise.  Deductions used in 
computing such net income or loss shall n ot include taxes based on 
or measured by income.  Provided, for corporations whose property 
for purposes of the tax imposed by Section 2355 of this title has an   
 
 
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initial investment cost equaling or exceeding Two Hundred Million 
Dollars ($200,000,000.00) and such investment is made on or after 
July 1, 1997, or for corporations which e xpand their property or 
facilities in this state and such expansion has an investment cost 
equaling or exceeding Two Hundred Million Dollars ($200,000,000.00) 
over a period not to exceed three (3) years, and such expansion is 
commenced on or after January 1, 2000, the three factors shall be 
apportioned with property and payroll, each comprising twenty -five 
percent (25%) of the apportionment factor and sales comprising fifty 
percent (50%) of the apportionment factor.  The apportionment 
factors shall be compu ted as follows: 
a. The property factor is a fraction, the numerator of 
which is the average value of the taxpayer ’s real and 
tangible personal property owned or rented and used i n 
this state during the tax period and the denominator 
of which is the average value of all the taxpayer ’s 
real and tangible personal property everywhere owned 
or rented and used during the tax period. 
(1) Property, the income from which is separately 
allocated in paragraph 4 of this subsection, 
shall not be included in determining this 
fraction.  The numerator of the fraction shall 
include a portion of the investment in 
transportation and other equipment having no   
 
 
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fixed situs, such as rolling stock, buses, trucks 
and trailers, including machinery and equipment 
carried thereon, airplanes, salespersons ’ 
automobiles and other similar equipment, in the 
proportion that miles traveled in Oklahoma this 
state by such equipment bears to total miles 
traveled, 
(2) Property owned by the taxpayer is valued at its 
original cost.  Property rented b y the taxpayer 
is valued at eight times the net annual rental 
rate.  Net annual rental rate is the annual 
rental rate paid by the taxpayer, less any annual 
rental rate received b y the taxpayer from 
subrentals, 
(3) The average value of property shall be determined 
by averaging the values at the beginning and 
ending of the tax period but the Oklahoma Tax 
Commission may require the averaging of monthly 
values during the tax period if reasonably 
required to reflect properly the average value of 
the taxpayer’s property; 
b. The payroll factor is a fraction, the numerator of 
which is the total compensation for services rendered 
in the state during the tax period, and the   
 
 
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denominator of which is the total compensation for 
services rendered everywhere during the tax period.  
“Compensation”, as used in this subsection , means 
those paid-for services to the extent related to the 
unitary business but does not include officers ’ 
salaries, wages and other compensation. 
(1) In the case of a transportation enterprise, the 
numerator of the fraction shall include a portion 
of such expenditure in connection with employees 
operating equipment over a fixed route, such as 
railroad employees, airline pilots, or bus 
drivers, in this state only a part of the time, 
in the proportion that mileage traveled in 
Oklahoma this state bears to total mileage 
traveled by such employees, 
(2) In any case the numerator of the fraction shall 
include a portion of such expendit ures in 
connection with itinerant employees, such as 
traveling salespersons, i n this state only a part 
of the time, in the proportion that time spent in 
Oklahoma this state bears to total time spent in 
furtherance of the enterprise by such employees; 
c. The sales factor is a fraction, the numerator of which 
is the total sales or gross revenue of the taxpayer in   
 
 
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this state during the tax period, and the denominator 
of which is the total sales or gross revenue of the 
taxpayer everywhere during the tax period.  “Sales”, 
as used in this subsection , does not include sales or 
gross revenue which are separately allocated in 
paragraph 4 of this subsection. 
(1) Sales of tangible personal property have a situs 
in this state if the property is delivered or 
shipped to a purchaser other than the United 
States government, within this state regardless 
of the FOB Freight on Board (FOB) point or other 
conditions of the sale; or the property is 
shipped from an office, store, warehouse, factory 
or other place of storage in this state and (a) 
the purchaser is the United States government or 
(b) the taxpayer is not doing business in the 
state of the destination of the shipment. 
(2) In the case of a railroad or interurban railway 
enterprise, the numerator of the fraction shall 
not be less than the allocation of revenues to 
this state as shown in its annual report to the 
Corporation Commission. 
(3) In the case of an airline, truck or bus 
enterprise or freight car, tank car, refrigerator   
 
 
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car or other railroad equipment enterprise, the 
numerator of the fraction shall include a portion 
of revenue from interstate transportation in the 
proportion that interstate mileage traveled in 
Oklahoma this state bears to total interstate 
mileage traveled. 
(4) In the case of an oil, gasoline or gas pi peline 
enterprise, the numerator of the fraction shall 
be either the total of traffic units of the 
enterprise within Oklahoma this state or the 
revenue allocated to Oklahoma this state based 
upon miles moved, at the option of the taxpayer, 
and the denominator of which shall be the total 
of traffic units of the enterprise or the reve nue 
of the enterprise everywhere as appropriate to 
the numerator.  A “traffic unit” is hereby 
defined as the transportation for a distance of 
one (1) mile of one (1) barrel of oi l, one (1) 
gallon of gasoline or one thousand (1,000) cubic 
feet of natural or casinghead gas, as the case 
may be. 
(5) In the case of a telephone or telegraph or other 
communication enterprise, the numerator of the 
fraction shall include that portion of th e   
 
 
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interstate revenue as is allocated pursuant to 
the accounting procedures pre scribed by the 
Federal Communications Commission; provided that 
in respect to each corporation or business entity 
required by the Federal Communications Commission 
to keep its books and records in accordance with 
a uniform system of accounts prescribed by such 
Commission, the intrastate net income shall be 
determined separately in the manner provided by 
such uniform system of accounts and only the 
interstate income shall be subjec t to allocation 
pursuant to the provisions of this subsection.  
Provided further, that the gross revenue factors 
shall be those as are determined pursuant to the 
accounting procedures prescribed by the Federal 
Communications Commission. 
In any case where the apportionment of the three factors 
prescribed in this paragraph attributes to Oklahoma this state a 
portion of net income of the enterprise out of all appropriate 
proportion to the property owned and/or business transacted within 
this state, because of the fact that one or more of the factors so 
prescribed are not employed to any appreciable extent in furtherance 
of the enterprise; or because one or more factors not so prescribed 
are employed to a considerable extent in furtherance of the   
 
 
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enterprise; or because of other reasons, the Tax Commission is 
empowered to permit, after a showing by taxpayer that an excessive 
portion of net income has been attributed to Oklahoma this state, or 
require, when in its judgment an insufficient portion of net income 
has been attributed to Oklahoma this state, the elimination, 
substitution, or use of additional factors, or reduction or increase 
in the weight of such prescribed factors.  Provided, however, that 
any such variance from such prescribed factors which has the ef fect 
of increasing the portion of net income attributable to Oklahoma 
this state must not be inherently arbitrary, and application of the 
recomputed final apportionment to the net income of the enterprise 
must attribute to Oklahoma this state only a reasonable portion 
thereof. 
6.  For calendar years 1997 and 1998, the owner of a new or 
expanded agricultural commodity processing facility in this state 
may exclude from Oklahoma taxable income, or in the case of an 
individual, the Oklahoma adjusted gross incom e, fifteen percent 
(15%) of the investment by the owner in the new or expanded 
agricultural commodity processing facility.  For calendar year 1999, 
and all subsequent years, the percentage, not to exceed fifteen 
percent (15%), available to the owner of a n ew or expanded 
agricultural commodity processing facility in this state claimi ng 
the exemption shall be adjusted annually so that the total estimated 
reduction in tax liability does not exceed One Million Dollars   
 
 
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($1,000,000.00) annually.  The Tax Commissi on shall promulgate rules 
for determining the percentage of the investment which each eligible 
taxpayer may exclude.  The exclusion provided by this paragraph 
shall be taken in the taxable year when the investment is made.  In 
the event the total reduction in tax liability authorized by this 
paragraph exceeds One Million Dollars ($1 ,000,000.00) in any 
calendar year, the Tax Commission shall permit any excess over One 
Million Dollars ($1,000,000.00) and shall factor such excess into 
the percentage for subseq uent years.  Any amount of the exemption 
permitted to be excluded pursuant to the provisions of this 
paragraph but not used in any year may be carried forward as an 
exemption from income pursuant to the provisions of this paragraph 
for a period not exceedi ng six (6) years following the year in which 
the investment was originally mad e. 
For purposes of this paragraph: 
a. “Agricultural commodity processing facility ” means 
building buildings, structures, fixtures and 
improvements used or operated primarily for the 
processing or production of marketable products from 
agricultural commodities.  The term shall also mean a 
dairy operation that requires a depreciable investment 
of at least Two Hundred Fifty Thousand Dollars 
($250,000.00) and which produces milk from dairy cows.  
The term does not include a facility that provides   
 
 
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only, and nothing more than, storage, cleaning, drying 
or transportation of agricultural commodities, and 
b. “Facility” means each part of the facility which is 
used in a process primarily for : 
(1) the processing of agricultural commodities, 
including receiving or storing agricultural 
commodities, or the production of milk at a dairy 
operation, 
(2) transporting the agricultural commodities or 
product before, during or after the processing, 
or 
(3) packaging or otherwise preparing the product for 
sale or shipment. 
7.  Despite any provision to the contrary in paragraph 3 of this 
subsection, for taxable years beginning after December 31, 1999, in 
the case of a taxpayer which has a farming loss, such farming loss 
shall be considered a net operating loss carryback in accordance 
with and to the extent of the Internal Revenue Code of 1986, as 
amended, 26 U.S.C., Section 172(b)(G) 172(b)(1)(B).  However, the 
amount of the net operating loss carryback shal l not exceed the 
lesser of: 
a. Sixty Thousand Dollars ($60,000.00), or 
b. the loss properly shown on Schedule F of the Internal 
Revenue Service Form 1040 reduced by one -half (1/2) of   
 
 
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the income from all other sources other than reflected 
on Schedule F. 
8.  In taxable years beginning after December 31, 1995, all 
qualified wages equal to the federal income tax credit set forth in 
26 U.S.C.A., Section 45A, shall be deducted from taxable income.  
The deduction allowed pursuant to this paragraph shall only be 
permitted for the tax years in which the federal tax credit pursuant 
to 26 U.S.C.A., Section 45A, is allowed.  For purposes of this 
paragraph, “qualified wages” means those wages used to calculate the 
federal credit pursuant to 26 U.S.C.A., Section 45A. 
9.  In taxable years beginning after December 31, 2005, an 
employer that is eligible for and utilizes the Safety Pays OSHA 
Consultation Service provided by the Oklahoma Department of Labor 
shall receive an exemption from taxable income in the amount of One 
Thousand Dollars ($1,000.00) for the tax year that the service is 
utilized. 
10.  For taxable years beginning on or after January 1, 2010, 
there shall be added to Oklahoma taxable income an amount equal to 
the amount of deferred income not included in such tax able income 
pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986 
as amended by Section 1231 of the American Recovery and Reinvestment 
Act of 2009 (P.L. No. 111 -5).  There shall be subtracted from 
Oklahoma taxable income an amount equal to the amount of deferred 
income included in such taxable income pursuant to Section 108(i)(1)   
 
 
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of the Internal Revenue Code of 1986 as amended by Section 1231 of 
the American Recovery and Reinvestment Act of 2009 (P.L. No. 111 -5). 
11.  For taxable years beginnin g on or after January 1, 2019, 
there shall be subtracted from Oklahoma taxable income or adjusted 
gross income any item of income or gain, and there shall be added to 
Oklahoma taxable income or adjusted gross income any item of loss or 
deduction that in th e absence of an election pursuant to the 
provisions of the Pass -Through Entity Tax Equity Act of 2019 would 
be allocated to a member or to an indirect member of an electing 
pass-through entity pursuant to Section 2351 et seq. of this title, 
if (i) the electing pass-through entity has accounted for such item 
in computing its Oklahoma net entity income or loss pursuant to the 
provisions of the Pass -Through Entity Tax Equity Act of 2019, and 
(ii) the total amount of tax attributable to any resulting Oklahoma 
net entity income has been paid.  The Oklahoma Tax Commission shall 
promulgate rules for the reporting of such exclusion to direct and 
indirect members of the electing pass -through entity.  As used in 
this paragraph, “electing pass-through entity”, “indirect member”, 
and “member” shall be defined in the same manner as prescribed by 
Section 2355.1P-2 of this title.  Notwithstanding the application of 
this paragraph, the adjusted tax basis of any ownership interest in 
a pass-through entity for purposes of Sect ion 2351 et seq. of this 
title shall be equal to its adjusted tax basis for fe deral income 
tax purposes.   
 
 
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B.  1.  The taxable income of any corporation shall be further 
adjusted to arrive at Oklahoma taxable income, except those 
corporations electing treatm ent as provided in subchapter S of the 
Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 1361 
et seq., and Section 2365 of this title, deductions pursuant to the 
provisions of the Accelerated Cost Recovery System as defined 
provided and allowed in the Economic Recovery Tax Act of 1981, 
Public Law 97-34, 26 U.S.C., Sectio n 168, for depreciation of assets 
placed into service after December 31, 1981, shall not be allowed in 
calculating Oklahoma taxable income.  Such corporations shall be 
allowed a deduction for depreciation of assets placed into service 
after December 31, 1981, in accordance with provisions of the 
Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 1 et 
seq., in effect immediately prior to the enactment of the 
Accelerated Cost Recovery System.  The Oklahoma tax basis for all 
such assets placed into service after December 31, 1981, calculated 
in this section shall be retained and utilized for all Oklahoma 
income tax purposes through the final disposition of such assets. 
Notwithstanding any other provisions of the Oklahoma Income Tax 
Act, Section 2351 et seq. of this title, or of the Internal Revenue 
Code of 1986, as amended, to the contrary, this subsection shall 
control calculation of depreciation of assets placed into servi ce 
after December 31, 1981, and before January 1, 1983.   
 
 
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For assets placed in s ervice and held by a corporation in which 
accelerated cost recovery system the Accelerated Cost Recovery 
System was previously disallowed, an adjustment to taxable income is 
required in the first taxable year beginning after December 31, 
1982, to reconcile the basis of such assets to the basis allowed in 
the Internal Revenue Code of 1986, as amended.  The purpose of this 
adjustment is to equalize the basis and allowance for deprec iation 
accounts between that reported to the Internal Revenue Service and 
that reported to Oklahoma this state. 
2.  For tax years beginning on or after January 1, 2009, and 
ending on or before December 31, 2009, there shall be added to 
Oklahoma taxable inc ome any amount in excess of One Hundred Seventy -
five Thousand Dollars ($175,000.00) which has been deducted as a 
small business expense under Internal Revenue Code of 1986, as 
amended, Section 179 as provided in the American Recovery and 
Reinvestment Act of 2009. 
C.  1.  For taxable years beginning after December 31, 1987, the 
taxable income of any corporation shall be further adjusted to 
arrive at Oklahoma taxable income for transfers of technology to 
qualified small businesses located in Oklahoma this state.  Such 
transferor corporation shall be allowed an exemption from taxable 
income of an amount equal to the amount of royalty payment received 
as a result of such transfer; provided, however, such amount shall 
not exceed ten percent (10%) of the amount of gross proceeds   
 
 
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received by such transferor corporation as a result of the 
technology transfer.  Such exemption shall be allowed for a period 
not to exceed ten (10) years from the date of receipt of the first 
royalty payment accruing from such transfer.  N o exemption may be 
claimed for transfers of technology to qualified small businesses 
made prior to January 1, 1988. 
2.  For purposes of this subsection: 
a. “Qualified small business ” means an entity, whether 
organized as a corporation, partnership, or 
proprietorship, organized for profit with its 
principal place of business located within this state 
and which meets the following criteria: 
(1) Capitalization of not more than Two Hundred Fifty 
Thousand Dollars ($250,000.00), 
(2) Having at least fifty percent (50%) of its 
employees and assets located in Oklahoma this 
state at the time of the transfer, and 
(3) Not a subsidiary or affiliate of the transferor 
corporation; 
b. “Technology” means a proprietary process, formula, 
pattern, device or compilation of scien tific or 
technical information which is not in the public 
domain;   
 
 
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c. “Transferor corporation” means a corporation which is 
the exclusive and undisputed owner of the technology 
at the time the transfer is made; and 
d. “Gross proceeds” means the total amount of 
consideration for the transfer of technology, whether 
the consideration is in money or otherwise. 
D.  1.  For taxable years beginning after December 31, 2005, the 
taxable income of any corporation, estate or trust, shall be further 
adjusted for qualify ing gains receiving capital treatment.  Such 
corporations, estates or trusts s hall be allowed a deduction from 
Oklahoma taxable income for the amount of qualifying gains receiving 
capital treatment earned by the corporation, estate or trust during 
the taxable year and included in the federal taxable income of such 
corporation, estate or trust. 
2.  As used in this subsection: 
a. “qualifying gains receiving capital treatment ” means 
the amount of net capital gains, as defined in Section 
1222(11) of the Interna l Revenue Code of 1986, as 
amended, included in the federal income tax return of 
the corporation, estate or trust that result from: 
(1) the sale of real property or tangible personal 
property located within Oklahoma this state that 
has been directly or ind irectly owned by the 
corporation, estate or trust for a holding period   
 
 
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of at least five (5) years prior to the date of 
the transaction from which such net capital gains 
arise, 
(2) the sale of stock or on the sale of an ownership 
interest in an Oklahoma com pany, limited 
liability company, or partnership where such 
stock or ownership interest has been directly or 
indirectly owned by the corporation, estate or 
trust for a holding period of at least three (3) 
years prior to the date of the transaction from 
which the net capital gains arise, or 
(3) the sale of real property, tangible personal 
property or intangible personal property located 
within Oklahoma this state as part of the sale of 
all or substantially all of the assets of an 
Oklahoma company, limited lia bility company, or 
partnership where such property has been directly 
or indirectly owned by such entity owned by the 
owners of such entity, and used in or derived 
from such entity for a period of at least three 
(3) years prior to the date of the transactio n 
from which the net capital gains arise, 
b. “holding period” means an uninterrupted period of 
time.  The holding period shall include any additional   
 
 
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period when the property was held by another 
individual or entity, if such additional period is 
included in the taxpayer’s holding period for the 
asset pursuant to the Internal Revenue Code of 1986, 
as amended, 
c. “Oklahoma company”, “limited liability company ”, or 
“partnership” means an entity whose primary 
headquarters have been located in Oklahoma this state 
for at least three (3) uninterrupted years prior to 
the date of the transaction from which the net capital 
gains arise, 
d. “direct” means the taxpayer directly owns the asset, 
and 
e. “indirect” means the taxpayer owns an interest in a 
pass-through entity (or chain of pass-through 
entities) that sells the asset that gives rise to t he 
qualifying gains receiving capital treatment. 
(1) With respect to sales of real property or 
tangible personal property located within 
Oklahoma this state, the deduction descri bed in 
this subsection shall not apply unless the pass -
through entity that makes the sale has held the 
property for not less than five (5) uninterrupted 
years prior to the date of the transaction that   
 
 
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created the capital gain, and each pass -through 
entity included in the chain of ownership has 
been a member, partner, or shareholder of the 
pass-through entity in the tier immediately below 
it for an uninterrupted period of not less than 
five (5) years. 
(2) With respect to sales of stock or ownership 
interest in or sales of all or substantially all 
of the assets of an Oklahoma company, limited 
liability company, or partnership, the deduction 
described in this subsection shall not apply 
unless the pass-through entity that makes the 
sale has held the stock or own ership interest or 
the assets for not less than three (3) 
uninterrupted years prior to the date of the 
transaction that created the capital gain, and 
each pass-through entity included in the chain of 
ownership has been a member, partner or 
shareholder of the pass-through entity in the 
tier immediately below it for an uninterrupted 
period of not less than three (3) years. 
E.  The Oklahoma adjusted gross income of any individual 
taxpayer shall be further adjusted as follows to arrive at Oklahoma 
taxable income:   
 
 
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1. a. In For tax year 2025 and previous tax years, in the 
case of individuals, there shall be added or deducted, 
as the case may be, the difference necessary to allow 
personal exemptions of One Thousand Dollars 
($1,000.00) in lieu of the personal exempt ions allowed 
by the Internal Revenue Code of 1986, as amended. 
b. For tax year 2026 and subsequent tax years, in the 
case of individuals, there shall be added or deducted, 
as the case may be, the difference necessary to allow 
personal exemptions of One Thousand Dollars 
($1,000.00) for the taxpayer and spouse and Five 
Thousand Dollars ($5,000.00) for each dependent in 
lieu of the personal exemptions allowed by the 
Internal Revenue Code of 1986, as amended. 
c. There shall be allowed an additional exemption of One 
Thousand Dollars ($1,000.00) for each taxpayer or 
spouse who is blind at the close of the tax year.  For 
purposes of this subparagraph, an individual is blind 
only if the central visual acuity of the individual 
does not exceed 20/200 in the better eye with 
correcting lenses, or if the visual acuity of the 
individual is greater than 20/200, but is accompanied 
by a limitation in the fields of vision such that the   
 
 
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widest diameter of the visual field subtends an angle 
no greater than twenty (20) degrees. 
c. d. There shall be allowed an additional exemption of One 
Thousand Dollars ($1,000.00) for each taxpayer or 
spouse who is sixty-five (65) years of age or older at 
the close of the tax year based upon the filing status 
and federal adjusted gross income of the taxpayer.  
Taxpayers with the following filing status may claim 
this exemption if the federal adjusted gross income 
does not exceed: 
(1) Twenty-five Thousand Dollars ($25,000.00) if 
married and filing jointly, 
(2) Twelve Thousand Five Hundred Dollars ( $12,500.00) 
if married and filing separately, 
(3) Fifteen Thousand Dollars ($15,000.00) if single, 
and 
(4) Nineteen Thousand Dollars ($19,000.00) if a 
qualifying head of household. 
Provided, for taxable years beginning after December 
31, 1999, amounts incl uded in the calculation of 
federal adjusted gross income pursuant to the 
conversion of a traditional individual retirement 
account to a Roth individual retirement account shall 
be excluded from federal adjusted gross income for   
 
 
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purposes of the income thres holds provided in this 
subparagraph. 
2. a. For taxable years beginning on or before December 31, 
2005, in the case of individuals who use the standard 
deduction in determining taxable income, there shall 
be added or deducted, as the case may be, the 
difference necessary to allow a standard deduction in 
lieu of the standard deduction allowed by the Internal 
Revenue Code of 1986, as amended, in an amount equal 
to the larger of fifteen percent (15%) of the Oklahoma 
adjusted gross income or One Thousand Dollars 
($1,000.00), but not to exceed Two Thousand Dollars 
($2,000.00), except that in the case of a married 
individual filing a separate return such deduction 
shall be the larger of fifteen percent (15%) of such 
Oklahoma adjusted gross income or Five Hundred Do llars 
($500.00), but not to exceed the maximum amount of One 
Thousand Dollars ($1,000.00). 
b. For taxable years beginning on or after January 1, 
2006, and before January 1, 2007, in the case of 
individuals who use the standard deduction in 
determining taxable income, there shall be added or 
deducted, as the case may be, the difference necessary 
to allow a standard deduction in lieu of the standard   
 
 
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deduction allowed by the Internal Revenue Code of 
1986, as amended, in an amount equal to: 
(1) Three Thousand Dollars ($3,000.00), if the filing 
status is married filing joint, head of hous ehold 
or qualifying widow, or 
(2) Two Thousand Dollars ($2,000.00), if the filing 
status is single or married filing separate. 
c. For the taxable year beginning on January 1, 200 7, and 
ending December 31, 2007, in the case of individuals 
who use the standard deduction in determining taxable 
income, there shall be added or deducted, as the case 
may be, the difference necessary to allow a standard 
deduction in lieu of the standard d eduction allowed by 
the Internal Revenue Code of 1986, as amended, in an 
amount equal to: 
(1) Five Thousand Five Hundred Dollars ($5,500.00), 
if the filing status is married filing joint or 
qualifying widow, or 
(2) Four Thousand One Hundred Twenty -five Dollars 
($4,125.00) for a head of household, or 
(3) Two Thousand Seven Hundred Fifty Dollars 
($2,750.00), if the filing status is single or 
married filing separate.   
 
 
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d. For the taxable year beginning on January 1, 2008, and 
ending December 31, 2008, in the cas e of individuals 
who use the standard deduction in determining taxable 
income, there shall be added or deducted, as the case 
may be, the difference necessary to allow a standard 
deduction in lieu of the standard deduction allowed by 
the Internal Revenue Co de of 1986, as amended, in an 
amount equal to: 
(1) Six Thousand Five Hundred Dollars ($6,500.00), if 
the filing status is married filing joint or 
qualifying widow, 
(2) Four Thousand Eight Hundred Seventy -five Dollars 
($4,875.00) for a head of household, or 
(3) Three Thousand Two Hundred Fifty Dollars 
($3,250.00), if the filing statu s is single or 
married filing separate. 
e. For the taxable year beginning on January 1, 2009, and 
ending December 31, 2009, in the case of individuals 
who use the standard deduct ion in determining taxable 
income, there shall be added or deducted, as the case 
may be, the difference necessary to allow a standard 
deduction in lieu of the standard deduction allowed by 
the Internal Revenue Code of 1986, as amended, in an 
amount equal to:   
 
 
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(1) Eight Thousand Five Hundred Dollars ($8,500.00), 
if the filing status i s married filing joint or 
qualifying widow, 
(2) Six Thousand Three Hundred Seventy -five Dollars 
($6,375.00) for a head of household, or 
(3) Four Thousand Two Hundred Fifty Dollar s 
($4,250.00), if the filing status is single or 
married filing separate. 
Oklahoma adjusted gross income shall be increased by 
any amounts paid for motor vehicle excise taxes which 
were deducted as allowed by the Internal Revenue Code 
of 1986, as amended. 
f. For taxable years beginning on or after January 1, 
2010, and ending on Dece mber 31, 2016, in the case of 
individuals who use the standard deduction in 
determining taxable income, there shall be added or 
deducted, as the case may be, the difference neces sary 
to allow a standard deduction equal to the standard 
deduction allowed by the Internal Revenue Code of 
1986, as amended, based upon the amount and filing 
status prescribed by such Code for purposes of filing 
federal individual income tax returns. 
g. For Except as provided for in subparagraph s h and i of 
this paragraph, for taxable years beginning on or   
 
 
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after January 1, 2017, in the case of individuals who 
use the standard deduction in determining taxable 
income, there shall be added or deducted, as the case 
may be, the difference necessary to allow a standard 
deduction in lieu of the standard deduction allowed by 
the Internal Revenue Code of 1986, as amended, as 
follows: 
(1) Six Thousand Three Hundred Fifty Dollars 
($6,350.00) for single or married filin g 
separately, 
(2) Twelve Thousand Seven Hundred Dollars 
($12,700.00) for marri ed filing jointly or 
qualifying widower with dependent child, and 
(3) Nine Thousand Three Hundred Fifty Dollars 
($9,350.00) for head of household. 
h. For tax year 2026 and subseq uent tax years, in the 
case of individual women who are at least twenty -five 
(25) years of age and less than thirty (30) years of 
age by the end of the calendar year corresponding to 
the tax year, who claim a dependent, and who use the 
standard deduction i n determining taxable income, 
there shall be added or deducted, as the case ma y be, 
the difference necessary to allow a standard deduction 
in lieu of the standard deduction allowed by the   
 
 
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Internal Revenue Code of 1986, as amended, equal to 
the amount determined by the United States Department 
of Housing and Urban Development to be the estimated 
median income of this state for the year preceding the 
corresponding tax year or the amount allowed pursuant 
to subparagraph g of this paragraph, whichever is 
greater.  Women who qualify for the standard deduction 
provided by this paragraph an d file as married filing 
jointly are allowed the deduction provided by this 
paragraph or subparagraph g of this paragraph, 
whichever is greater. 
i. Except as provided for in subp aragraph h of this 
paragraph, for tax year 2026 and subsequent tax years, 
in the case of individuals who file married filing 
jointly, who were married in the calendar year of the 
corresponding tax year or the preceding calendar year, 
and who use the standard deduction in determining 
taxable income, there shall be added or deducted, as 
the case may be, the difference necessary to allow a 
standard deduction in lieu of the standard deduction 
allowed by the Internal Revenue Code of 1986, as 
amended, equal to fi fty percent (50%) of the amount 
determined by the United States Department of Housing 
and Urban Development to be the estimated median   
 
 
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income of this state for the year preceding the 
corresponding tax year or the amount allowed pursuant 
to subparagraph g of this paragraph, whichever is 
greater. 
3. a. In the case of resident and part -year resident 
individuals having adjusted gross income from sources 
both within and without the state, the itemized or 
standard deductions and personal exemptions shall be 
reduced to an amount which is the same portion of the 
total thereof as Oklahoma adjusted gross income is of 
adjusted gross income.  To the extent itemized 
deductions include allowable moving expense, proration 
of moving expense shall not be required or permitte d 
but allowable moving expense shall be fully deductible 
for those taxpayers m oving within or into Oklahoma 
this state and no part of moving expense shall be 
deductible for those taxpayers moving without or out 
of Oklahoma this state.  All other itemized o r 
standard deductions and personal exemptions shall be 
subject to proration as provided by law. 
b. For taxable years beginning on or after January 1, 
2018, the net amount of itemized deductions allowable 
on an Oklahoma income tax return, subject to the 
provisions of paragraph 24 of this subsection, shall   
 
 
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not exceed Seventeen Thousan d Dollars ($17,000.00).  
For purposes of this subparagraph, charitable 
contributions and medical expenses deductible for 
federal income tax purposes shall be excluded from the 
amount of Seventeen Thousand Dollars ($17,000.00) as 
specified by this subparagraph. 
4.  A resident individual with a physical disability 
constituting a substantial handicap to employment may deduct from 
Oklahoma adjusted gross income such expenditures to mo dify a motor 
vehicle, home or workplace as are necessary to compensate for his or 
her handicap.  A veteran certified by the United States Department 
of Veterans Affairs of the federal government as having a service -
connected disability shall be conclusivel y presumed to be an 
individual with a physical disability constituting a substantial 
handicap to employment.  The Tax Commission shall promulgate rules 
containing a list of combinations of common disabilities and 
modifications which may be presumed to qual ify for this deduction.  
The Tax Commission shall prescribe necessary requirem ents for 
verification. 
5. a. Before July 1, 2010, the first One Thousand Five 
Hundred Dollars ($1,500.00) received by any person 
from the United States as salary or compensation in 
any form, other than retirement benefits, as a member   
 
 
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of any component of the Armed Forces of the United 
States shall be deducted from taxable income. 
b. On or after July 1, 2010, one hundred percent (100%) 
of the income received by any person from the United 
States as salary or compensation in any form, other 
than retirement benefits, as a member of any component 
of the Armed Forces of the United States shall be 
deducted from taxable income. 
c. Whenever the filing of a timely income tax return by a 
member of the Armed Forces of the United States is 
made impracticable or impossible of accomplishment by 
reason of: 
(1) absence from the United States, which term 
includes only the states and the District of 
Columbia, 
(2) absence from the State of Oklahoma this state 
while on active duty, or 
(3) confinement in a hospital within the Unit ed 
States for treatment of wounds, injuries or 
disease, 
the time for filing a return and paying an income tax 
shall be and is hereby extended without incurring 
liability for interest or penalties, to the fifteenth 
day of the third month following the month in which:   
 
 
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(a) Such individual shall return to the United 
States if the extension is granted pursuant 
to subparagraph a division 1 of this 
paragraph subparagraph, return to the State 
of Oklahoma this state if the extension is 
granted pursuant to subparagraph b division 
2 of this paragraph subparagraph or be 
discharged from such hospital if the 
extension is granted pursuant to 
subparagraph c division 3 of this paragraph 
subparagraph, or 
(b) An executor, administrator, or conservator 
of the estate of the taxpayer is appointed, 
whichever event occurs the earliest. 
Provided, that the Tax Commission may, in its discretion, grant 
any member of the Armed Forces of the United States an ext ension of 
time for filing of income tax returns and payment of income tax 
without incurring liabilities for interest or penalties.  Such 
extension may be granted only when in the judgment of the Tax 
Commission a good cause exists therefor and may be for a period in 
excess of six (6) months.  A record of every such extension granted, 
and the reason therefor, shall be kept. 
6.  Before July 1, 2010, the salary or any other form of 
compensation, received from the United States by a member of any   
 
 
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component of the Armed Forces of the United States, shall be 
deducted from taxable income dur ing the time in which the person is 
detained by the enemy in a conflict, is a prisoner of war or is 
missing in action and not deceased; provided, after July 1, 2010, 
all such salary or compensation shall be subject to the deduction as 
provided pursuant to paragraph 5 of this subsection. 
7. a. An individual taxpayer, whether resident or 
nonresident, may deduct an amount equal to the federal 
income taxes paid by the taxpayer during the taxable 
year. 
b. Federal taxes as described in subparagraph a of this 
paragraph shall be deductible by any individual 
taxpayer, whether resident or nonresident, only to the 
extent they relate to income subject to taxation 
pursuant to the provisions of the Oklahoma Income Tax 
Act.  The maximum amount allowable in the preceding 
paragraph 5 of this subsection shall be prorated on 
the ratio of the Oklahoma adjusted gross income to 
federal adjusted gross income. 
c. For the purpose of this paragraph, “federal income 
taxes paid” shall mean federal income taxes, surtaxes 
imposed on incomes or excess profits taxes, as though 
the taxpayer was on the accrual basis.  In determining 
the amount of deduction for federal income taxes for   
 
 
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tax year 2001, the amount of the deduction shall not 
be adjusted by the amount of any accelerated ten 
percent (10%) tax rate bracket credit or advanced 
refund of the credit received during the tax year 
provided pursuant to the federal Economic Growth and 
Tax Relief Reconciliation Act of 2001, P.L. No. 107-
16, and the advanced refund of such credit shall not 
be subject to taxation. 
d. The provisions of this paragraph shall apply to all 
taxable years ending after December 31, 1978, and 
beginning before January 1, 2006. 
8.  Retirement benefi ts not to exceed Five Thousand Five Hundred 
Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five 
Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand 
Dollars ($10,000.00) for the 2006 tax year and all subsequent tax 
years, which are received by an individual from the civil service of 
the United States, the Ok lahoma Public Employees Retirement System, 
the Teachers’ Retirement System of Oklahoma, the Oklahoma Law 
Enforcement Retirement System, the Oklahoma Firefighters Pension and 
Retirement System, the Oklahoma Police Pension and Retirement 
System, the employee retirement systems created by counties pursuant 
to Section 951 et seq. of Title 19 of the Oklahoma Statutes, the The 
Uniform Retirement System for Justices and Judges, the Oklah oma 
Wildlife Conservation Department Retirement Fund, the Oklahoma   
 
 
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Employment Security Commission Retirement Plan, or the employee 
retirement systems created by municipalities pursuant to Section 48 -
101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt 
from taxable income. 
9.  In taxable years beginning after December 3l, 1984, Social 
Security benefits received by an individual shall be exempt from 
taxable income, to the extent such benefits are included in the 
federal adjusted gross income pursu ant to the provisions of Section 
86 of the Internal Revenue Code of 1986, as amended, 26 U.S.C., 
Section 86. 
10.  For taxable years beginning after December 31, 1994, lump -
sum distributions from employer plans of deferred compensation, 
which are not qualif ied plans within the meaning of Section 401(a) 
of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 
401(a), and which are deposited in and accounted for within a 
separate bank account or brokerage account in a financial 
institution within t his state, shall be excluded from taxable income 
in the same manner as a quali fying rollover contribution to an 
individual retirement account within the meaning of Section 408 of 
the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 
408.  Amounts withdrawn from such bank or brokerage account, 
including any earnings thereon, shall be included in taxable income 
when withdrawn in the same manner as withdrawals from individual   
 
 
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retirement accounts within the meaning of Section 408 of the 
Internal Revenue Code of 1986, as amended. 
11.  In taxable years beginning after December 31, 1995, 
contributions made to and interest received from a medical savings 
account established pursuant to Sections 2621 through 2623 of Title 
63 of the Oklahoma Statutes shall be exempt from taxable income. 
12.  For taxable years beginning after December 31, 1996, the 
Oklahoma adjusted gross income of any individual taxpayer who is a 
swine or poultry producer may be further adjusted for the deduction 
for depreciation allowed fo r new construction or expansion costs 
which may be computed using the same dep reciation method elected for 
federal income tax purposes except that the useful life shall be 
seven (7) years for purposes of this paragraph.  If depreciation is 
allowed as a deduction in determining the adjusted gross income of 
an individual, any depreciation calculated and claimed pursuant to 
this section shall in no event be a duplication of any depreciation 
allowed or permitted on the federal income tax return of the 
individual. 
13. a. In taxable years beginning before January 1, 2005, 
retirement benefits not to exceed the amounts 
specified in this paragraph, which are received by an 
individual sixty-five (65) years of age or older and 
whose Oklahoma adjusted gross income is Tw enty-five 
Thousand Dollars ($25,000.00) or less if the filing   
 
 
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status is single, head of household, or married filing 
separate, or Fifty Thousand Dollars ($50,000.00) or 
less if the filing status is married filing joint or 
qualifying widow, shall be exempt from taxable income.  
In taxable years beginning after December 31, 2004, 
retirement benefits not to exceed the amounts 
specified in this paragraph, which are received by an 
individual whose Oklahoma adjusted gross income is 
less than the qualifying amount specified in this 
paragraph, shall be exempt from taxable income. 
b. For purposes of this paragraph, the qualifying amount 
shall be as follows: 
(1) in taxable years beginning after December 31, 
2004, and prior to January 1, 2007, the 
qualifying amount sha ll be Thirty-seven Thousand 
Five Hundred Dollars ($37,500.00) or less if the 
filing status is single, head of household, or 
married filing separate, or Seventy -five Thousand 
Dollars ($75,000.00) or less if the filing status 
is married filing jointly or qua lifying widow, 
(2) in the taxable year beginning January 1, 2007, 
the qualifying amount shall be Fifty Thousand 
Dollars ($50,000.00) or less if the filing status 
is single, head of household, or married filing   
 
 
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separate, or One Hundred Thousand Dollars 
($100,000.00) or less if the filing status is 
married filing jointly or qualifying widow, 
(3) in the taxable year beginning January 1, 2008, 
the qualifying amount shall be Sixty -two Thousand 
Five Hundred Dollars ($62,500.00) or less if the 
filing status is sin gle, head of household, or 
married filing separate, or One Hundred Twenty -
five Thousand Dollars ($125,000.00) or less if 
the filing status is married filing jointly or 
qualifying widow, 
(4) in the taxable year beginning January 1, 2009, 
the qualifying amount shall be One Hundred 
Thousand Dollars ($100,000.00) or less if the 
filing status is single, head of household, or 
married filing separate, or Two Hundred Thousand 
Dollars ($200,000.00) or less if the filing 
status is married filing jointly or qualifying 
widow, and 
(5) in the taxable year beginning January 1, 2010, 
and subsequent taxable years, there shall be no 
limitation upon the qualifying amount.   
 
 
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c. For purposes of this paragraph, “retirement benefits” 
means the total distributions or withdrawals from the 
following: 
(1) an employee pension benefit plan which satisfies 
the requirements of Section 401 of the Internal 
Revenue Code of 1986, as amended, 26 U.S.C., 
Section 401, 
(2) an eligible deferred compensation plan that 
satisfies the requirements of Sec tion 457 of the 
Internal Revenue Code of 1986, as amended, 26 
U.S.C., Section 457, 
(3) an individual retirement account, annuity or 
trust or simplified employee pension that 
satisfies the requirements of Section 408 of the 
Internal Revenue Code of 1986, as amended, 26 
U.S.C., Section 408, 
(4) an employee annuity subject to the provi sions of 
Section 403(a) or (b) of the Internal Revenue 
Code of 1986, as amended, 26 U.S.C., Section 
403(a) or (b), 
(5) United States Retirement Bonds which satisfy the 
requirements of Section 86 of the Internal 
Revenue Code of 1986, as amended, 26 U.S.C., 
Section 86, or   
 
 
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(6) lump-sum distributions from a retirement plan 
which satisfies the requirements of Section 
402(e) of the Internal Revenue Code of 1986, as 
amended, 26 U.S.C., Section 402(e). 
d. The amount of the exemption provided by this paragraph 
shall be limited to Five Thousand Five Hundred Dollars 
($5,500.00) for the 2004 tax year, Seven Thousand Five 
Hundred Dollars ($7,500.00) for the 2005 tax year and 
Ten Thousand Dollars ($10,000.00) for the tax year 
2006 and for all subsequent tax years.  Any individual 
who claims the exemption provided for in paragraph 8 
of this subsection shall not be permitted to claim a 
combined total exemption pursuant to this paragraph 
and paragraph 8 of this subsection in an amount 
exceeding Five Thousand Five Hundred Doll ars 
($5,500.00) for the 2004 tax year, Seven Thousand Five 
Hundred Dollars ($7,500.00) for the 2005 tax year and 
Ten Thousand Dollars ($10,000.00) for the 2006 tax 
year and all subsequent tax years. 
14.  In taxable years beginning after December 31, 1999, for an 
individual engaged in production agriculture who has filed a 
Schedule F form with the taxpayer ’s federal income tax return for 
such taxable year, there shall be excluded f rom taxable income any 
amount which was included as federal taxable income or federal   
 
 
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adjusted gross income and which consists of the discharge of an 
obligation by a creditor of the taxpayer incurred to finance the 
production of agricultural products. 
15.  In taxable years beginning December 31, 2000, an amount 
equal to one hundred percent (100%) of the amount of any scholarship 
or stipend received from participation in the Oklahoma Police Corps 
Program, as established in Section 2 -140.3 of Title 47 of the 
Oklahoma Statutes shall be exempt from taxable income. 
16. a. In taxable years beginning after December 31, 2001, 
and before January 1, 2005, there shall be allowed a 
deduction in the amount of contributions to accounts 
established pursuant to the Oklahoma College Savings 
Plan Act.  The deduction shall equal the amount of 
contributions to accounts, but in no event shall the 
deduction for each contributor exceed Two Thousand 
Five Hundred Dollars ($2,500.00) each taxable year for 
each account. 
b. In taxable years beginning after December 31, 2004, 
each taxpayer shall be allowed a deduc tion for 
contributions to accounts established pursuant to the 
Oklahoma College Savings Plan Act.  The maximum annual 
deduction shall equal the amount of contributions to 
all such accounts plus any contributions to such 
accounts by the taxpayer for prior taxable years after   
 
 
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December 31, 2004, which were not deducted, but in no 
event shall the deduction for each tax year exceed Ten 
Thousand Dollars ($10,000.00) for each individual 
taxpayer or Twenty Thousand Dollars ($20,000.00) for 
taxpayers filing a joint return.  Any amount of a 
contribution that is not deducted by the taxpayer in 
the year for which the contribution is made may be 
carried forward as a deduction from income for th e 
succeeding five (5) years.  For taxable years 
beginning after December 31, 2005, deductions may be 
taken for contributions and rollovers made during a 
taxable year and up to April 15 of the succeeding 
year, or the due date of a taxpayer ’s state income tax 
return, excluding extensions, whichever is later.  
Provided, a deduction for the same contribution may 
not be taken for two (2) different taxable years. 
c. In taxable years beginning after December 31, 2006, 
deductions for contributions made pursuant to 
subparagraph b of this paragraph shall be limited as 
follows: 
(1) for a taxpayer who qualified for the five -year 
carryforward election and who takes a rollover or 
nonqualified withdrawal during that period, the 
tax deduction otherwise available pursuant to   
 
 
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subparagraph b of this paragraph shall be reduced 
by the amount which is equa l to the rollover or 
nonqualified withdrawal, and 
(2) for a taxpayer who elects to take a rollover or 
nonqualified withdrawal within the same tax year 
in which a contribution was made to the 
taxpayer’s account, the tax deduction otherwise 
available pursuant to subparagraph b of this 
paragraph shall be reduced by the amount of the 
contribution which is equal to the rollover or 
nonqualified withdrawal. 
d. If a taxpayer elects to tak e a rollover on a 
contribution for which a deduction has been taken 
pursuant to subparagraph b of this paragraph within 
one (1) year of the date of contribution, the amount 
of such rollover shall be included in the adjusted 
gross income of the taxpayer in the taxable year of 
the rollover. 
e. If a taxpayer makes a nonqualified withdrawal of 
contributions for which a deduction was taken pursuant 
to subparagraph b of this paragraph, such nonqualified 
withdrawal and any earnings thereon shall be included 
in the adjusted gross income of the taxpayer in the 
taxable year of the nonqualified withdrawal.   
 
 
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f. As used in this paragraph: 
(1) “non-qualified withdrawal ” means a withdrawal 
from an Oklahoma College Savings Plan account 
other than one of the following: 
(a) a qualified withdrawal, 
(b) a withdrawal made as a result of the death 
or disability of the designated beneficiary 
of an account, 
(c) a withdrawal that is made on the account of 
a scholarship or the allowance or payment 
described in Section 135(d)(1)(B) or ( C) or 
by the Internal Revenue Code of 1986, as 
amended, received by the design ated 
beneficiary to the extent the amount of the 
refund does not exceed the amount of the 
scholarship, allowance, or payment, or 
(d) a rollover or change of designated 
beneficiary as permitted by subsection F of 
Section 3970.7 of Title 70 of the Oklahoma 
Statutes, and 
(2) “rollover” means the transfer of funds from the 
Oklahoma College Savings Plan to any other plan 
under Section 529 of the Internal Revenue Code of 
1986, as amended.   
 
 
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17.  For tax years 2006 through 2021, retirement benefits 
received by an individual from any component of the Armed Forces of 
the United States in an amount not to exceed the greater of seventy -
five percent (75%) of such benefits or Ten Thousand Dollars 
($10,000.00) shall be exempt from taxable income but in no case less 
than the amount of the exemption provided by paragraph 13 of this 
subsection.  For tax year 2022 and subsequent tax years, retirement 
benefits received by an individual from any componen t of the Armed 
Forces of the United States shall be exempt from taxable income . 
18.  For taxable years beginning after December 31, 2006, 
retirement benefits received by federal civil service retirees, 
including survivor annuities, paid in lieu of Social S ecurity 
benefits shall be exempt from taxable income to the extent such 
benefits are included in the federal adjusted gross income pursuant 
to the provisions of Section 86 of the Internal Revenue Code of 
1986, as amended, 26 U.S.C., Section 86, according t o the following 
schedule: 
a. in the taxable year beginning January 1, 2007, tw enty 
percent (20%) of such benefits shall be exempt, 
b. in the taxable year beginning January 1, 2008, forty 
percent (40%) of such benefits shall be exempt, 
c. in the taxable year beginning January 1, 2009, sixty 
percent (60%) of such benefits shall be exempt,   
 
 
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d. in the taxable year beginning January 1, 2010, eighty 
percent (80%) of such benefits shall be exempt, and 
e. in the taxable year beginning January 1, 2011, and 
subsequent taxable years, one hundred percent (100%) 
of such benefits shall be exempt. 
19. a. For taxable years beginning after December 31, 2007, a 
resident individual may deduct up to Ten Thousand 
Dollars ($10,000.00) from Oklahoma adjusted gross 
income if the individual, or the dependent of the 
individual, while living, donates one or more human 
organs of the individual to another human being for 
human organ transplantation.  As used in this 
paragraph, “human organ” means all or part of a liver, 
pancreas, kidney, intestine, lung, or bone marrow.  A 
deduction that is claimed under this parag raph may be 
claimed in the taxable year in which the human organ 
transplantation occurs. 
b. An individual may claim this deduction only once, and 
the deduction may be claimed onl y for unreimbursed 
expenses that are incurred by the individual and 
related to the organ donation of the individual. 
c. The Oklahoma Tax Commission shall promulgate rules to 
implement the provisions of this paragraph which shall 
contain a specific list of expenses which may be   
 
 
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presumed to qualify for the deduction.  The Tax 
Commission shall prescribe necessary requirements for 
verification. 
20.  For taxable years beginning after December 31, 2009, there 
shall be exempt from taxable income any amount receive d by the 
beneficiary of the death benefit for an emergency medical technician 
or a registered emergency medical responder provided by Section 1 -
2505.1 of Title 63 of the Oklahoma Statutes. 
21.  For taxable years beginning after December 31, 2008, 
taxable income shall be increased by any unemployment compensation 
exempted under Secti on 85(c) of the Internal Revenue Code of 1986, 
as amended, 26 U.S.C., Section 85(c) (2009). 
22.  For taxable years beginning after December 31, 2008, there 
shall be exempt from ta xable income any payment in an amount less 
than Six Hundred Dollars ($600.00) received by a person as an award 
for participation in a competitive livestock show event.  For 
purposes of this paragraph, the payment shall be treated as a 
scholarship amount pa id by the entity sponsoring the event and the 
sponsoring entity shall cause th e payment to be categorized as a 
scholarship in its books and records. 
23.  For taxable years beginning on or after January 1, 2016, 
taxable income shall be increased by any amou nt of state and local 
sales or income taxes deducted under 26 U.S.C., Section 164 of the 
Internal Revenue Code of 1986, as amended.  If the amount of state   
 
 
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and local taxes deducted on the federal return is limited, taxable 
income on the state return shall be increased only by the amount 
actually deducted after any such limitations a re applied. 
24.  For taxable years beginning after December 31, 2020, each 
taxpayer shall be allowed a deduction for contributions to accounts 
established pursuant to the Achievi ng a Better Life Experience 
(ABLE) Program program as established in Section 4001.1 et seq. of 
Title 56 of the Oklahoma Statutes.  For any tax year, the deduction 
provided for in this paragraph shall not exceed Ten Thousand Dollars 
($10,000.00) for an indi vidual taxpayer or Twenty Thousand Dollars 
($20,000.00) for taxpayers filing a joint return.  Any amount of 
contribution not deducted by the taxpayer in the tax year for which 
the contribution is made may be carried forward as a deduction from 
income for up to five (5) tax years.  Deductions may be taken for 
contributions made during the tax year and through April 15 of the 
succeeding tax year, or through the due date of a taxpayer ’s state 
income tax return excluding extensions, whichever is later.  
Provided, a deduction for the same contribution may not be taken in 
more than one (1) tax year. 
25.  For tax year 2026 and subsequent tax years, income earned 
by women who have given birth to at least four (4) children and have 
claimed the children as dependent s until the time that the 
dependents turn eighteen (18) years of age , by women who adopt or 
become the legal guardian of at least four (4) children before the   
 
 
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children turn thirteen (13) years of age and have claimed the 
children as dependents until the time that the dependents turn 
eighteen (18) years of age, or by a combination of b oth shall be 
exempt from taxable income.  For women who would otherwise qualify 
for the exemption provided by this paragraph and file as married 
filing jointly, the income earned by both taxpayers shall be exempt. 
26.  For tax year 2026 and subsequent tax years, income ear ned 
by individuals less than twenty -five (25) years of age by the end of 
the calendar year corresponding to the tax year shall be exempt from 
taxable income. 
F.  1.  For taxable years beginning after December 31, 2004, a 
deduction from the Oklahoma adjusted gross income of any individual 
taxpayer shall be allowed for qualifying gains receiving capital 
treatment that are included in the federal adjusted gross incom e of 
such individual taxpayer during the taxable year. 
2.  As used in this subsection: 
a. “qualifying gains receiving capital treatment ” means 
the amount of net capital gains, as defined in Section 
1222(11) of the Internal Revenue Code of 1986, as 
amended, included in an individual taxpayer ’s federal 
income tax return that result fr om: 
(1) the sale of real property or tangible personal 
property located within Oklahoma this state that 
has been directly or indirectly owned by the   
 
 
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individual taxpayer for a hol ding period of at 
least five (5) years prior to the date of the 
transaction from which such net capital gains 
arise, 
(2) the sale of stock or the sale of a direct or 
indirect ownership interest in an Oklahoma 
company, limited liability company, or 
partnership where such stock or ownership 
interest has been directly or indirectly own ed by 
the individual taxpayer for a holding period of 
at least two (2) years prior to the date of the 
transaction from which the net capital gains 
arise, or 
(3) the sale of real property, tangible personal 
property or intangible personal property located 
within Oklahoma this state as part of the sale of 
all or substantially all of the assets of an 
Oklahoma company, limited liability company, or 
partnership or an Oklahoma proprieto rship 
business enterprise where such property has been 
directly or indirectly owned by such entity or 
business enterprise or owned by the owners of 
such entity or business enterprise for a period 
of at least two (2) years prior to the date of   
 
 
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the transaction from which the net capital gains 
arise, 
b. “holding period” means an uninterrupted period of 
time.  The holding period shall include any additional 
period when the property was held by another 
individual or entity, if such additional period is 
included in the taxpayer’s holding period for the 
asset pursuant to the Internal Revenu e Code of 1986, 
as amended, 
c. “Oklahoma company,” “limited liability company, ” or 
“partnership” means an entity whose primary 
headquarters have been located in Oklahoma this state 
for at least three (3) uninterrupted years prior to 
the date of the transaction from which the net capital 
gains arise, 
d. “direct” means the individual taxpayer directly owns 
the asset, 
e. “indirect” means the individual taxpayer owns an 
interest in a pass-through entity (or chain of pass -
through entities) that sells the asset t hat gives rise 
to the qualifying gains receiving capital treatment. 
(1) With respect to sales of real property or 
tangible personal property located within 
Oklahoma this state, the deduction described in   
 
 
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this subsection shall not apply unless the pass -
through entity that makes the sale has held the 
property for not less than five (5) uninterrupted 
years prior to the date of the transaction that 
created the capital gain, and each p ass-through 
entity included in the chain of ownership has 
been a member, partn er, or shareholder of the 
pass-through entity in the tier immediately below 
it for an uninterrupted period of not less than 
five (5) years. 
(2) With respect to sales of stock or ownership 
interest in or sales of all or substantially all 
of the assets of an Oklahoma company, limited 
liability company, partnership or Oklahoma 
proprietorship business enterprise, the deduction 
described in this subsection shall not apply 
unless the pass-through entity that makes the 
sale has held the stock or ownership interest for 
not less than two (2) uninterrupted years prior 
to the date of the transaction that created the 
capital gain, and each pass -through entity 
included in the chain of ownership has been a 
member, partner or shareholder of the pass -
through entity in the tier immediately below it   
 
 
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for an uninterrupted period of not less than two 
(2) years.  For purposes of this division, 
uninterrupted ownership prior to July 1, 2007, 
shall be included in the determination of the 
required holding period prescribed by this 
division, and 
f. “Oklahoma proprietorship business enterprise ” means a 
business enterprise whose income and expenses have 
been reported on Schedule C or F of an individual 
taxpayer’s federal income tax return, or any similar 
successor schedule published by the Internal Revenue 
Service and whose primary headquarters have been 
located in Oklahoma this state for at least three (3) 
uninterrupted years prior to the date of the 
transaction from which the net capital gains arise. 
G.  1.  For purposes of computing its Oklahoma taxable income 
under this section, the dividends -paid deduction otherwise allowed 
by federal law in computing net income of a real estate investment 
trust that is subject to federal income tax shall be added back in 
computing the tax imposed by this state under this title if the real 
estate investment trust is a captive real estate investment trust. 
2.  For purposes of computing its Oklahoma taxable income under 
this section, a taxpayer shall add back otherwise deductible rents 
and interest expenses paid to a captive real estate investment trust   
 
 
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that is not subject to the provisions of paragraph 1 of this 
subsection.  As used in this subsection: 
a. the term “real estate investment trust” or “REIT” 
means the meaning ascribed to such term in Section 856 
of the Internal Revenue Code of 1986, as amended, 
b. the term “captive real estate investment trust ” means 
a real estate investment trust, the shares or 
beneficial interests of which are not regularly traded 
on an established securities market and more than 
fifty percent (50%) of the voting power or value of 
the beneficial interests or shares of which are owned 
or controlled, directly or indirectly, or 
constructively, by a sin gle entity that is: 
(1) treated as an association taxable as a 
corporation under the Internal Revenue Code of 
1986, as amended, and 
(2) not exempt from federal income tax pursuant to 
the provisions of Section 501(a) of the Internal 
Revenue Code of 1986, as amended. 
The term shall not include a real estate investment 
trust that is intended to be regularly traded on an 
established securities market, and that satisfies the 
requirements of Section 856(a)(5) and (6) of the U.S. 
Internal Revenue Code of 1986, as amended, by reason   
 
 
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of Section 856(h)(2) of the Internal Revenue Code of 
1986, as amended, 
c. the term “association taxable as a corporation ” shall 
not include the following entities: 
(1) any real estate investment trust as defined in 
paragraph a of this su bsection other than a 
“captive real estate investment trust ” captive 
real estate investment trust, 
(2) any qualified real estate investment trust 
subsidiary under Section 856(i) of the Internal 
Revenue Code of 1986, as amended, other than a 
qualified REIT subsidiary of a “captive real 
estate investment trust ” captive real estate 
investment trust, 
(3) any Listed Australian Property Trust listed 
Australian property trust (meaning an Australian 
unit trust registered as a “Managed Investment 
Scheme” “managed investment scheme” under the 
Australian Corporations Act 2001 in which the 
principal class of units is listed on a 
recognized stock exchange in Australia and is 
regularly traded on an established securities 
market), or an entity organized as a trust, 
provided that a Listed Australian Property Trust   
 
 
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listed Australian property trust owns or 
controls, directly or indirectly, seventy -five 
percent (75%) or more of the voting power or 
value of the beneficial interests or shares of 
such trust, or 
(4) any Qualified Foreign Entity qualified foreign 
entity, meaning a corporation, trust, associat ion 
or partnership organized outside the laws of the 
United States and which satisfies the following 
criteria: 
(a) at least seventy-five percent (75%) of the 
entity’s total asset value at the close of 
its taxable year is represented by real 
estate assets, as defined in Section 
856(c)(5)(B) of the Internal Revenue Code of 
1986, as amended, thereby including shares 
or certificates of beneficial interest in 
any real estate investment trust, cash and 
cash equivalents, and U.S. Government 
securities, 
(b) the entity receives a dividend -paid 
deduction comparable to Section 561 of the 
Internal Revenue Code of 1986, as amended, 
or is exempt from entity level tax,   
 
 
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(c) the entity is required to distribute at 
least eighty-five percent (85%) of its 
taxable income, as computed in the 
jurisdiction in which it is organized, to 
the holders of its shares or certificates of 
beneficial interest on an annual basis, 
(d) not more than ten percent (10%) of the 
voting power or value in such entity is held 
directly or indirectly or co nstructively by 
a single entity or individual, or the shares 
or beneficial interests of such entity are 
regularly traded on an established 
securities market, and 
(e) the entity is organized in a country which 
has a tax treaty with the United States. 
3.  For purposes of this subsection, the constructive ownership 
rules of Section 318(a) of the Internal Revenue Code, as modified by 
Section 856(d)(5) of the Internal Revenue Code of 1986, as amended, 
shall apply in determining the ownership of stock, assets, or net 
profits of any person. 
4.  A real estate investment trust that does not become 
regularly traded on an established securities market within one (1) 
year of the date on which it first becomes a real estate investment 
trust shall be deemed not to have been regularly traded on an   
 
 
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established securities market, retroactive to the date it first 
became a real estate investment trust, and shall file an amended 
return reflecting such retroactive designation for any tax year or 
part year occurring during its ini tial year of status as a real 
estate investment trust.  For purposes of this subsection, a real 
estate investment trust becomes a real estate investment trust on 
the first day it has both met the requirements of Section 856 of the 
Internal Revenue Code of 1986, as amended, and has elected to be 
treated as a real estate investment trust pursuant to Section 
856(c)(1) of the Internal Revenue Code of 1986, as amended. 
SECTION 2.  This act shall become effective November 1, 2025. 
 
60-1-1557 QD 12/31/2024 12:03:44 AM