OK
Oklahoma Senate Bill SB312

Oklahoma 2025 Regular Session

Oklahoma Senate Bill SB312 Compare Versions

Only one version of the bill is available at this time.
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5353 STATE OF OKLAHOMA
5454
5555 1st Session of the 60th Legislature (2025)
5656
5757 SENATE BILL 312 By: Jett
5858
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6363 AS INTRODUCED
6464
6565 An Act relating to income tax; amending 68 O.S. 2021,
6666 Section 2358, as last amended by Section 155, Chapter
6767 452, O.S.L. 2024 (68 O.S. Supp. 2024, Section 2358),
6868 which relates to adjustments; modifying amount of
6969 personal exemption for certain tax years; modifying
7070 amount of standard deduction for certain taxpayers
7171 for certain tax years; providing exemption from
7272 taxable income for women claiming certain amount of
7373 dependents; providing exemption from taxable income
7474 for taxpayers of certain age; updating statutory
7575 references; updating statutory language; and
7676 providing an effective date .
7777
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8181 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHO MA:
8282 SECTION 1. AMENDATORY 68 O.S. 2021, Section 2358, as
8383 last amended by Section 155, Chapter 452, O.S.L. 2024 (68 O.S. Supp.
8484 2024, Section 2358), is amended to read as follows:
8585 Section 2358. For all tax years beginning after Dec ember 31,
8686 1981, taxable income and adjusted gross income shall be adjusted to
8787 arrive at Oklahoma taxable income and Oklahoma adjusted gross income
8888 as required by this section.
8989
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140140 A. The taxable income of any taxpayer shall be adjusted to
141141 arrive at Oklahoma t axable income for corporations and Oklahoma
142142 adjusted gross income for individuals, as follows:
143143 1. There shall be added interest income on obligations of any
144144 state or political subdivision thereto which is not otherwise
145145 exempted pursuant to other laws of t his state, to the extent that
146146 such interest is not included in taxable income and adjusted gross
147147 income.
148148 2. There shall be deducted amounts included in such income that
149149 the state is prohibited from taxing because of the provisions of the
150150 Federal United States Constitution, the State Oklahoma Constitution,
151151 federal laws or laws of Oklahoma.
152152 3. The amount of any federal net operating loss deduction shall
153153 be adjusted as follows:
154154 a. For carryovers and carrybacks to taxable years
155155 beginning before January 1, 198 1, the amount of any
156156 net operating loss deduction allowed to a taxpayer for
157157 federal income tax purposes shall be reduced to an
158158 amount which is the same portion thereof as the loss
159159 from sources within this state, as determined pursuant
160160 to this section and S ection 2362 of this title, for
161161 the taxable year in which such loss is sustained is of
162162 the total loss for such year;
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214214 b. For carryovers and carrybacks to taxable years
215215 beginning after December 31, 1980, the amount of any
216216 net operating loss deduction allowed for the taxable
217217 year shall be an amount equal to the aggregate of the
218218 Oklahoma net operating loss carryovers and carrybacks
219219 to such year. Oklahoma net operating losses shall be
220220 separately determined by reference to Section 172 of
221221 the Internal Revenue Code of 1986, as amended, 26
222222 U.S.C., Section 172, as modified by the Oklahoma
223223 Income Tax Act, Section 2351 et seq. of this title,
224224 and shall be allowed without regard to the existence
225225 of a federal net operating loss. For tax years
226226 beginning after December 31, 2000, and ending before
227227 January 1, 2008, the years to which such losses may be
228228 carried shall be determined solely by reference to
229229 Section 172 of the Internal Revenue Code of 1986, as
230230 amended, 26 U.S.C., Section 172, with the exception
231231 that the terms “net operating loss” and “taxable
232232 income” shall be replaced with “Oklahoma net operating
233233 loss” and “Oklahoma taxable income ”. For tax years
234234 beginning after December 31, 2007, and ending before
235235 January 1, 2009, years to which such losses may be
236236 carried back shall be limited to two (2) years. For
237237 tax years beginning after December 31, 200 8, the years
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289289 to which such losses may be carried back shall be
290290 determined solely by reference to Section 172 of the
291291 Internal Revenue Code of 1986, as amended, 26 U.S.C.,
292292 Section 172, with the exception that the terms “net
293293 operating loss” and “taxable income” shall be replaced
294294 with “Oklahoma net operating loss ” and “Oklahoma
295295 taxable income”.
296296 4. Items of the following nature shall be allocated as
297297 indicated. Allowable deductions at tributable to items separately
298298 allocable in subparagraphs a, b and c of this p aragraph, whether or
299299 not such items of income were actually received, shall be allocated
300300 on the same basis as those items:
301301 a. Income from real and tangible personal property, suc h
302302 as rents, oil and mining production or royalties, and
303303 gains or losses from sales of such property, shall be
304304 allocated in accordance with the situs of such
305305 property;
306306 b. Income from intangible personal property, such as
307307 interest, dividends, patent or copyr ight royalties,
308308 and gains or losses from sales of such property, shall
309309 be allocated in accordance with the domiciliary situs
310310 of the taxpayer, except that:
311311 (1) where such property has acquired a nonunitary
312312 business or commercial situs apart from the
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364364 domicile of the taxpayer such income shall be
365365 allocated in accordance with such business or
366366 commercial situs; interest income from
367367 investments held to generate working capital for
368368 a unitary business enterprise shall be included
369369 in apportionable income; a resident trust or
370370 resident estate shall be treated as having a
371371 separate commercial or business situs insofar as
372372 undistributed income is concerned, but shall not
373373 be treated as having a separate commercial or
374374 business situs insofar as distributed income is
375375 concerned,
376376 (2) for taxable years beginning after December 31,
377377 2003, capital or ordinary gains or losses from
378378 the sale of an ownership interest in a publicly
379379 traded partnership, as defined by Section 7704(b)
380380 of the Internal Revenue Code of 1986, as amended,
381381 shall be allocated to this state in the ratio of
382382 the original cost of such partnership ’s tangible
383383 property in this state to the original cost of
384384 such partnership’s tangible property everywhere,
385385 as determined at the time of the sale; if more
386386 than fifty percent (50% ) of the value of the
387387 partnership’s assets consists of intangible
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439439 assets, capital or ordinary gains or losses from
440440 the sale of an ownership interest in the
441441 partnership shall be allocated to this state in
442442 accordance with the sales factor of the
443443 partnership for its first full tax period
444444 immediately preceding its tax period during whic h
445445 the ownership interest in the partnership was
446446 sold; the provisions of this division shall only
447447 apply if the capital or ordinary gains or losses
448448 from the sale of an ownership in terest in a
449449 partnership do not constitute qualifying gain
450450 receiving capital treatment as defined in
451451 subparagraph a of paragraph 2 of subsection F of
452452 this section,
453453 (3) income from such property which is required to be
454454 allocated pursuant to the provisions of paragraph
455455 5 of this subsection shall be allocated as herein
456456 provided;
457457 c. Net income or loss from a business activity which is
458458 not a part of business carried on within or without
459459 the state of a unitary character shall be separately
460460 allocated to the state i n which such activity is
461461 conducted;
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513513 d. In the case of a manufacturing or processing
514514 enterprise the business of which in Oklahoma this
515515 state consists solely of marketing its products by:
516516 (1) sales having a situs without this state, shipped
517517 directly to a point from without the state to a
518518 purchaser within the state, commonly known as
519519 interstate sales,
520520 (2) sales of the product stored in public warehouses
521521 within the state pursuant to “in transit”
522522 tariffs, as prescribed and allowed by the
523523 Interstate Commerce Comm ission, to a purchaser
524524 within the state,
525525 (3) sales of the product stored in public warehouses
526526 within the state where the shipment to such
527527 warehouses is not covered by “in transit”
528528 tariffs, as prescribed and allowed by the
529529 Interstate Commerce Commission, to a purchaser
530530 within or without the state,
531531 the Oklahoma net income shall, at th e option of the
532532 taxpayer, be that portion of the total net income of
533533 the taxpayer for federal income tax purposes derived
534534 from the manufacture and/or processing and sales
535535 everywhere as determined by the ratio of the sales
536536 defined in this section made to the purchaser within
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588588 the state to the total sales everywhere. The term
589589 “public warehouse” as used in this subparagraph means
590590 a licensed public warehouse, the principal business of
591591 which is warehousing merchandise for the public;
592592 e. In the case of insurance companies, Oklahoma taxable
593593 income shall be taxable income of the taxpayer for
594594 federal tax purposes, as adjusted for the adjustments
595595 provided pursuant to the provisions of paragr aphs 1
596596 and 2 of this subsection, apportioned as follows:
597597 (1) except as otherwise provided by division (2) of
598598 this subparagraph, taxable income of an insurance
599599 company for a taxable year shall be apportioned
600600 to this state by multiplying such income by a
601601 fraction, the numerator of which is the direct
602602 premiums written for insurance on property or
603603 risks in this state, and the denominator of which
604604 is the direct premiums written for insurance on
605605 property or risks everywhere. For purposes of
606606 this subsection, the term “direct premiums
607607 written” means the total amount of direct
608608 premiums written, assessments and annuity
609609 considerations as reported for the taxable year
610610 on the annual statement filed by the company with
611611 the Insurance Commissioner in the form approved
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663663 by the National Association of Insurance
664664 Commissioners, or such other form as may be
665665 prescribed in lieu thereof,
666666 (2) if the principal source of premiums written by an
667667 insurance company consists of premiums for
668668 reinsurance accepted by it, the taxable income of
669669 such company shall be apportioned to this state
670670 by multiplying such income by a fraction, the
671671 numerator of which is the sum of (a) direct
672672 premiums written for insurance on property or
673673 risks in this state, plus (b) premiums written
674674 for reinsurance accepted in respect of property
675675 or risks in this state, and the denominator of
676676 which is the sum of (c) direct premiums written
677677 for insurance on property or risks everywhere,
678678 plus (d) premiums written for reinsurance
679679 accepted in respect of property or risks
680680 everywhere. For purposes of this paragraph,
681681 premiums written for reinsurance accepted in
682682 respect of property or risks in this state,
683683 whether or not otherwise determinable, may at the
684684 election of the company be determined on the
685685 basis of the proportion which premi ums written
686686 for insurance accepted from companies
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738738 commercially domiciled in Oklahoma this state
739739 bears to premiums written for reinsurance
740740 accepted from all sources, or alternatively in
741741 the proportion which the sum of the direct
742742 premiums written for insuran ce on property or
743743 risks in this state by each ceding company from
744744 which reinsurance is accepted bears to the sum of
745745 the total direct premiums written by each such
746746 ceding company for the taxable year.
747747 5. The net income or loss remaining after the separate
748748 allocation in paragraph 4 of this subsection, being that which is
749749 derived from a unitary business enterprise, shall be apportioned to
750750 this state on the basis of the arithmetical average of three factors
751751 consisting of property, payroll and sales or gross re venue
752752 enumerated as subparagraphs a, b and c of this paragraph. Net
753753 income or loss as used in this paragraph includes that derived from
754754 patent or copyright royalties, purchase discounts, and interest on
755755 accounts receivable relating to or arising from a bu siness activity,
756756 the income from which is apportioned pursuant to this subsect ion,
757757 including the sale or other disposition of such property and any
758758 other property used in the unitary enterprise. Deductions used in
759759 computing such net income or loss shall n ot include taxes based on
760760 or measured by income. Provided, for corporations whose property
761761 for purposes of the tax imposed by Section 2355 of this title has an
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813813 initial investment cost equaling or exceeding Two Hundred Million
814814 Dollars ($200,000,000.00) and such investment is made on or after
815815 July 1, 1997, or for corporations which e xpand their property or
816816 facilities in this state and such expansion has an investment cost
817817 equaling or exceeding Two Hundred Million Dollars ($200,000,000.00)
818818 over a period not to exceed three (3) years, and such expansion is
819819 commenced on or after January 1, 2000, the three factors shall be
820820 apportioned with property and payroll, each comprising twenty -five
821821 percent (25%) of the apportionment factor and sales comprising fifty
822822 percent (50%) of the apportionment factor. The apportionment
823823 factors shall be compu ted as follows:
824824 a. The property factor is a fraction, the numerator of
825825 which is the average value of the taxpayer ’s real and
826826 tangible personal property owned or rented and used i n
827827 this state during the tax period and the denominator
828828 of which is the average value of all the taxpayer ’s
829829 real and tangible personal property everywhere owned
830830 or rented and used during the tax period.
831831 (1) Property, the income from which is separately
832832 allocated in paragraph 4 of this subsection,
833833 shall not be included in determining this
834834 fraction. The numerator of the fraction shall
835835 include a portion of the investment in
836836 transportation and other equipment having no
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888888 fixed situs, such as rolling stock, buses, trucks
889889 and trailers, including machinery and equipment
890890 carried thereon, airplanes, salespersons ’
891891 automobiles and other similar equipment, in the
892892 proportion that miles traveled in Oklahoma this
893893 state by such equipment bears to total miles
894894 traveled,
895895 (2) Property owned by the taxpayer is valued at its
896896 original cost. Property rented b y the taxpayer
897897 is valued at eight times the net annual rental
898898 rate. Net annual rental rate is the annual
899899 rental rate paid by the taxpayer, less any annual
900900 rental rate received b y the taxpayer from
901901 subrentals,
902902 (3) The average value of property shall be determined
903903 by averaging the values at the beginning and
904904 ending of the tax period but the Oklahoma Tax
905905 Commission may require the averaging of monthly
906906 values during the tax period if reasonably
907907 required to reflect properly the average value of
908908 the taxpayer’s property;
909909 b. The payroll factor is a fraction, the numerator of
910910 which is the total compensation for services rendered
911911 in the state during the tax period, and the
912912
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963963 denominator of which is the total compensation for
964964 services rendered everywhere during the tax period.
965965 “Compensation”, as used in this subsection , means
966966 those paid-for services to the extent related to the
967967 unitary business but does not include officers ’
968968 salaries, wages and other compensation.
969969 (1) In the case of a transportation enterprise, the
970970 numerator of the fraction shall include a portion
971971 of such expenditure in connection with employees
972972 operating equipment over a fixed route, such as
973973 railroad employees, airline pilots, or bus
974974 drivers, in this state only a part of the time,
975975 in the proportion that mileage traveled in
976976 Oklahoma this state bears to total mileage
977977 traveled by such employees,
978978 (2) In any case the numerator of the fraction shall
979979 include a portion of such expendit ures in
980980 connection with itinerant employees, such as
981981 traveling salespersons, i n this state only a part
982982 of the time, in the proportion that time spent in
983983 Oklahoma this state bears to total time spent in
984984 furtherance of the enterprise by such employees;
985985 c. The sales factor is a fraction, the numerator of which
986986 is the total sales or gross revenue of the taxpayer in
987987
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10381038 this state during the tax period, and the denominator
10391039 of which is the total sales or gross revenue of the
10401040 taxpayer everywhere during the tax period. “Sales”,
10411041 as used in this subsection , does not include sales or
10421042 gross revenue which are separately allocated in
10431043 paragraph 4 of this subsection.
10441044 (1) Sales of tangible personal property have a situs
10451045 in this state if the property is delivered or
10461046 shipped to a purchaser other than the United
10471047 States government, within this state regardless
10481048 of the FOB Freight on Board (FOB) point or other
10491049 conditions of the sale; or the property is
10501050 shipped from an office, store, warehouse, factory
10511051 or other place of storage in this state and (a)
10521052 the purchaser is the United States government or
10531053 (b) the taxpayer is not doing business in the
10541054 state of the destination of the shipment.
10551055 (2) In the case of a railroad or interurban railway
10561056 enterprise, the numerator of the fraction shall
10571057 not be less than the allocation of revenues to
10581058 this state as shown in its annual report to the
10591059 Corporation Commission.
10601060 (3) In the case of an airline, truck or bus
10611061 enterprise or freight car, tank car, refrigerator
10621062
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11131113 car or other railroad equipment enterprise, the
11141114 numerator of the fraction shall include a portion
11151115 of revenue from interstate transportation in the
11161116 proportion that interstate mileage traveled in
11171117 Oklahoma this state bears to total interstate
11181118 mileage traveled.
11191119 (4) In the case of an oil, gasoline or gas pi peline
11201120 enterprise, the numerator of the fraction shall
11211121 be either the total of traffic units of the
11221122 enterprise within Oklahoma this state or the
11231123 revenue allocated to Oklahoma this state based
11241124 upon miles moved, at the option of the taxpayer,
11251125 and the denominator of which shall be the total
11261126 of traffic units of the enterprise or the reve nue
11271127 of the enterprise everywhere as appropriate to
11281128 the numerator. A “traffic unit” is hereby
11291129 defined as the transportation for a distance of
11301130 one (1) mile of one (1) barrel of oi l, one (1)
11311131 gallon of gasoline or one thousand (1,000) cubic
11321132 feet of natural or casinghead gas, as the case
11331133 may be.
11341134 (5) In the case of a telephone or telegraph or other
11351135 communication enterprise, the numerator of the
11361136 fraction shall include that portion of th e
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11881188 interstate revenue as is allocated pursuant to
11891189 the accounting procedures pre scribed by the
11901190 Federal Communications Commission; provided that
11911191 in respect to each corporation or business entity
11921192 required by the Federal Communications Commission
11931193 to keep its books and records in accordance with
11941194 a uniform system of accounts prescribed by such
11951195 Commission, the intrastate net income shall be
11961196 determined separately in the manner provided by
11971197 such uniform system of accounts and only the
11981198 interstate income shall be subjec t to allocation
11991199 pursuant to the provisions of this subsection.
12001200 Provided further, that the gross revenue factors
12011201 shall be those as are determined pursuant to the
12021202 accounting procedures prescribed by the Federal
12031203 Communications Commission.
12041204 In any case where the apportionment of the three factors
12051205 prescribed in this paragraph attributes to Oklahoma this state a
12061206 portion of net income of the enterprise out of all appropriate
12071207 proportion to the property owned and/or business transacted within
12081208 this state, because of the fact that one or more of the factors so
12091209 prescribed are not employed to any appreciable extent in furtherance
12101210 of the enterprise; or because one or more factors not so prescribed
12111211 are employed to a considerable extent in furtherance of the
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12631263 enterprise; or because of other reasons, the Tax Commission is
12641264 empowered to permit, after a showing by taxpayer that an excessive
12651265 portion of net income has been attributed to Oklahoma this state, or
12661266 require, when in its judgment an insufficient portion of net income
12671267 has been attributed to Oklahoma this state, the elimination,
12681268 substitution, or use of additional factors, or reduction or increase
12691269 in the weight of such prescribed factors. Provided, however, that
12701270 any such variance from such prescribed factors which has the ef fect
12711271 of increasing the portion of net income attributable to Oklahoma
12721272 this state must not be inherently arbitrary, and application of the
12731273 recomputed final apportionment to the net income of the enterprise
12741274 must attribute to Oklahoma this state only a reasonable portion
12751275 thereof.
12761276 6. For calendar years 1997 and 1998, the owner of a new or
12771277 expanded agricultural commodity processing facility in this state
12781278 may exclude from Oklahoma taxable income, or in the case of an
12791279 individual, the Oklahoma adjusted gross incom e, fifteen percent
12801280 (15%) of the investment by the owner in the new or expanded
12811281 agricultural commodity processing facility. For calendar year 1999,
12821282 and all subsequent years, the percentage, not to exceed fifteen
12831283 percent (15%), available to the owner of a n ew or expanded
12841284 agricultural commodity processing facility in this state claimi ng
12851285 the exemption shall be adjusted annually so that the total estimated
12861286 reduction in tax liability does not exceed One Million Dollars
12871287
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13381338 ($1,000,000.00) annually. The Tax Commissi on shall promulgate rules
13391339 for determining the percentage of the investment which each eligible
13401340 taxpayer may exclude. The exclusion provided by this paragraph
13411341 shall be taken in the taxable year when the investment is made. In
13421342 the event the total reduction in tax liability authorized by this
13431343 paragraph exceeds One Million Dollars ($1 ,000,000.00) in any
13441344 calendar year, the Tax Commission shall permit any excess over One
13451345 Million Dollars ($1,000,000.00) and shall factor such excess into
13461346 the percentage for subseq uent years. Any amount of the exemption
13471347 permitted to be excluded pursuant to the provisions of this
13481348 paragraph but not used in any year may be carried forward as an
13491349 exemption from income pursuant to the provisions of this paragraph
13501350 for a period not exceedi ng six (6) years following the year in which
13511351 the investment was originally mad e.
13521352 For purposes of this paragraph:
13531353 a. “Agricultural commodity processing facility ” means
13541354 building buildings, structures, fixtures and
13551355 improvements used or operated primarily for the
13561356 processing or production of marketable products from
13571357 agricultural commodities. The term shall also mean a
13581358 dairy operation that requires a depreciable investment
13591359 of at least Two Hundred Fifty Thousand Dollars
13601360 ($250,000.00) and which produces milk from dairy cows.
13611361 The term does not include a facility that provides
13621362
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14131413 only, and nothing more than, storage, cleaning, drying
14141414 or transportation of agricultural commodities, and
14151415 b. “Facility” means each part of the facility which is
14161416 used in a process primarily for :
14171417 (1) the processing of agricultural commodities,
14181418 including receiving or storing agricultural
14191419 commodities, or the production of milk at a dairy
14201420 operation,
14211421 (2) transporting the agricultural commodities or
14221422 product before, during or after the processing,
14231423 or
14241424 (3) packaging or otherwise preparing the product for
14251425 sale or shipment.
14261426 7. Despite any provision to the contrary in paragraph 3 of this
14271427 subsection, for taxable years beginning after December 31, 1999, in
14281428 the case of a taxpayer which has a farming loss, such farming loss
14291429 shall be considered a net operating loss carryback in accordance
14301430 with and to the extent of the Internal Revenue Code of 1986, as
14311431 amended, 26 U.S.C., Section 172(b)(G) 172(b)(1)(B). However, the
14321432 amount of the net operating loss carryback shal l not exceed the
14331433 lesser of:
14341434 a. Sixty Thousand Dollars ($60,000.00), or
14351435 b. the loss properly shown on Schedule F of the Internal
14361436 Revenue Service Form 1040 reduced by one -half (1/2) of
14371437
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14881488 the income from all other sources other than reflected
14891489 on Schedule F.
14901490 8. In taxable years beginning after December 31, 1995, all
14911491 qualified wages equal to the federal income tax credit set forth in
14921492 26 U.S.C.A., Section 45A, shall be deducted from taxable income.
14931493 The deduction allowed pursuant to this paragraph shall only be
14941494 permitted for the tax years in which the federal tax credit pursuant
14951495 to 26 U.S.C.A., Section 45A, is allowed. For purposes of this
14961496 paragraph, “qualified wages” means those wages used to calculate the
14971497 federal credit pursuant to 26 U.S.C.A., Section 45A.
14981498 9. In taxable years beginning after December 31, 2005, an
14991499 employer that is eligible for and utilizes the Safety Pays OSHA
15001500 Consultation Service provided by the Oklahoma Department of Labor
15011501 shall receive an exemption from taxable income in the amount of One
15021502 Thousand Dollars ($1,000.00) for the tax year that the service is
15031503 utilized.
15041504 10. For taxable years beginning on or after January 1, 2010,
15051505 there shall be added to Oklahoma taxable income an amount equal to
15061506 the amount of deferred income not included in such tax able income
15071507 pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986
15081508 as amended by Section 1231 of the American Recovery and Reinvestment
15091509 Act of 2009 (P.L. No. 111 -5). There shall be subtracted from
15101510 Oklahoma taxable income an amount equal to the amount of deferred
15111511 income included in such taxable income pursuant to Section 108(i)(1)
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15631563 of the Internal Revenue Code of 1986 as amended by Section 1231 of
15641564 the American Recovery and Reinvestment Act of 2009 (P.L. No. 111 -5).
15651565 11. For taxable years beginnin g on or after January 1, 2019,
15661566 there shall be subtracted from Oklahoma taxable income or adjusted
15671567 gross income any item of income or gain, and there shall be added to
15681568 Oklahoma taxable income or adjusted gross income any item of loss or
15691569 deduction that in th e absence of an election pursuant to the
15701570 provisions of the Pass -Through Entity Tax Equity Act of 2019 would
15711571 be allocated to a member or to an indirect member of an electing
15721572 pass-through entity pursuant to Section 2351 et seq. of this title,
15731573 if (i) the electing pass-through entity has accounted for such item
15741574 in computing its Oklahoma net entity income or loss pursuant to the
15751575 provisions of the Pass -Through Entity Tax Equity Act of 2019, and
15761576 (ii) the total amount of tax attributable to any resulting Oklahoma
15771577 net entity income has been paid. The Oklahoma Tax Commission shall
15781578 promulgate rules for the reporting of such exclusion to direct and
15791579 indirect members of the electing pass -through entity. As used in
15801580 this paragraph, “electing pass-through entity”, “indirect member”,
15811581 and “member” shall be defined in the same manner as prescribed by
15821582 Section 2355.1P-2 of this title. Notwithstanding the application of
15831583 this paragraph, the adjusted tax basis of any ownership interest in
15841584 a pass-through entity for purposes of Sect ion 2351 et seq. of this
15851585 title shall be equal to its adjusted tax basis for fe deral income
15861586 tax purposes.
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16381638 B. 1. The taxable income of any corporation shall be further
16391639 adjusted to arrive at Oklahoma taxable income, except those
16401640 corporations electing treatm ent as provided in subchapter S of the
16411641 Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 1361
16421642 et seq., and Section 2365 of this title, deductions pursuant to the
16431643 provisions of the Accelerated Cost Recovery System as defined
16441644 provided and allowed in the Economic Recovery Tax Act of 1981,
16451645 Public Law 97-34, 26 U.S.C., Sectio n 168, for depreciation of assets
16461646 placed into service after December 31, 1981, shall not be allowed in
16471647 calculating Oklahoma taxable income. Such corporations shall be
16481648 allowed a deduction for depreciation of assets placed into service
16491649 after December 31, 1981, in accordance with provisions of the
16501650 Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 1 et
16511651 seq., in effect immediately prior to the enactment of the
16521652 Accelerated Cost Recovery System. The Oklahoma tax basis for all
16531653 such assets placed into service after December 31, 1981, calculated
16541654 in this section shall be retained and utilized for all Oklahoma
16551655 income tax purposes through the final disposition of such assets.
16561656 Notwithstanding any other provisions of the Oklahoma Income Tax
16571657 Act, Section 2351 et seq. of this title, or of the Internal Revenue
16581658 Code of 1986, as amended, to the contrary, this subsection shall
16591659 control calculation of depreciation of assets placed into servi ce
16601660 after December 31, 1981, and before January 1, 1983.
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17121712 For assets placed in s ervice and held by a corporation in which
17131713 accelerated cost recovery system the Accelerated Cost Recovery
17141714 System was previously disallowed, an adjustment to taxable income is
17151715 required in the first taxable year beginning after December 31,
17161716 1982, to reconcile the basis of such assets to the basis allowed in
17171717 the Internal Revenue Code of 1986, as amended. The purpose of this
17181718 adjustment is to equalize the basis and allowance for deprec iation
17191719 accounts between that reported to the Internal Revenue Service and
17201720 that reported to Oklahoma this state.
17211721 2. For tax years beginning on or after January 1, 2009, and
17221722 ending on or before December 31, 2009, there shall be added to
17231723 Oklahoma taxable inc ome any amount in excess of One Hundred Seventy -
17241724 five Thousand Dollars ($175,000.00) which has been deducted as a
17251725 small business expense under Internal Revenue Code of 1986, as
17261726 amended, Section 179 as provided in the American Recovery and
17271727 Reinvestment Act of 2009.
17281728 C. 1. For taxable years beginning after December 31, 1987, the
17291729 taxable income of any corporation shall be further adjusted to
17301730 arrive at Oklahoma taxable income for transfers of technology to
17311731 qualified small businesses located in Oklahoma this state. Such
17321732 transferor corporation shall be allowed an exemption from taxable
17331733 income of an amount equal to the amount of royalty payment received
17341734 as a result of such transfer; provided, however, such amount shall
17351735 not exceed ten percent (10%) of the amount of gross proceeds
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17871787 received by such transferor corporation as a result of the
17881788 technology transfer. Such exemption shall be allowed for a period
17891789 not to exceed ten (10) years from the date of receipt of the first
17901790 royalty payment accruing from such transfer. N o exemption may be
17911791 claimed for transfers of technology to qualified small businesses
17921792 made prior to January 1, 1988.
17931793 2. For purposes of this subsection:
17941794 a. “Qualified small business ” means an entity, whether
17951795 organized as a corporation, partnership, or
17961796 proprietorship, organized for profit with its
17971797 principal place of business located within this state
17981798 and which meets the following criteria:
17991799 (1) Capitalization of not more than Two Hundred Fifty
18001800 Thousand Dollars ($250,000.00),
18011801 (2) Having at least fifty percent (50%) of its
18021802 employees and assets located in Oklahoma this
18031803 state at the time of the transfer, and
18041804 (3) Not a subsidiary or affiliate of the transferor
18051805 corporation;
18061806 b. “Technology” means a proprietary process, formula,
18071807 pattern, device or compilation of scien tific or
18081808 technical information which is not in the public
18091809 domain;
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18611861 c. “Transferor corporation” means a corporation which is
18621862 the exclusive and undisputed owner of the technology
18631863 at the time the transfer is made; and
18641864 d. “Gross proceeds” means the total amount of
18651865 consideration for the transfer of technology, whether
18661866 the consideration is in money or otherwise.
18671867 D. 1. For taxable years beginning after December 31, 2005, the
18681868 taxable income of any corporation, estate or trust, shall be further
18691869 adjusted for qualify ing gains receiving capital treatment. Such
18701870 corporations, estates or trusts s hall be allowed a deduction from
18711871 Oklahoma taxable income for the amount of qualifying gains receiving
18721872 capital treatment earned by the corporation, estate or trust during
18731873 the taxable year and included in the federal taxable income of such
18741874 corporation, estate or trust.
18751875 2. As used in this subsection:
18761876 a. “qualifying gains receiving capital treatment ” means
18771877 the amount of net capital gains, as defined in Section
18781878 1222(11) of the Interna l Revenue Code of 1986, as
18791879 amended, included in the federal income tax return of
18801880 the corporation, estate or trust that result from:
18811881 (1) the sale of real property or tangible personal
18821882 property located within Oklahoma this state that
18831883 has been directly or ind irectly owned by the
18841884 corporation, estate or trust for a holding period
18851885
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19361936 of at least five (5) years prior to the date of
19371937 the transaction from which such net capital gains
19381938 arise,
19391939 (2) the sale of stock or on the sale of an ownership
19401940 interest in an Oklahoma com pany, limited
19411941 liability company, or partnership where such
19421942 stock or ownership interest has been directly or
19431943 indirectly owned by the corporation, estate or
19441944 trust for a holding period of at least three (3)
19451945 years prior to the date of the transaction from
19461946 which the net capital gains arise, or
19471947 (3) the sale of real property, tangible personal
19481948 property or intangible personal property located
19491949 within Oklahoma this state as part of the sale of
19501950 all or substantially all of the assets of an
19511951 Oklahoma company, limited lia bility company, or
19521952 partnership where such property has been directly
19531953 or indirectly owned by such entity owned by the
19541954 owners of such entity, and used in or derived
19551955 from such entity for a period of at least three
19561956 (3) years prior to the date of the transactio n
19571957 from which the net capital gains arise,
19581958 b. “holding period” means an uninterrupted period of
19591959 time. The holding period shall include any additional
19601960
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20112011 period when the property was held by another
20122012 individual or entity, if such additional period is
20132013 included in the taxpayer’s holding period for the
20142014 asset pursuant to the Internal Revenue Code of 1986,
20152015 as amended,
20162016 c. “Oklahoma company”, “limited liability company ”, or
20172017 “partnership” means an entity whose primary
20182018 headquarters have been located in Oklahoma this state
20192019 for at least three (3) uninterrupted years prior to
20202020 the date of the transaction from which the net capital
20212021 gains arise,
20222022 d. “direct” means the taxpayer directly owns the asset,
20232023 and
20242024 e. “indirect” means the taxpayer owns an interest in a
20252025 pass-through entity (or chain of pass-through
20262026 entities) that sells the asset that gives rise to t he
20272027 qualifying gains receiving capital treatment.
20282028 (1) With respect to sales of real property or
20292029 tangible personal property located within
20302030 Oklahoma this state, the deduction descri bed in
20312031 this subsection shall not apply unless the pass -
20322032 through entity that makes the sale has held the
20332033 property for not less than five (5) uninterrupted
20342034 years prior to the date of the transaction that
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20862086 created the capital gain, and each pass -through
20872087 entity included in the chain of ownership has
20882088 been a member, partner, or shareholder of the
20892089 pass-through entity in the tier immediately below
20902090 it for an uninterrupted period of not less than
20912091 five (5) years.
20922092 (2) With respect to sales of stock or ownership
20932093 interest in or sales of all or substantially all
20942094 of the assets of an Oklahoma company, limited
20952095 liability company, or partnership, the deduction
20962096 described in this subsection shall not apply
20972097 unless the pass-through entity that makes the
20982098 sale has held the stock or own ership interest or
20992099 the assets for not less than three (3)
21002100 uninterrupted years prior to the date of the
21012101 transaction that created the capital gain, and
21022102 each pass-through entity included in the chain of
21032103 ownership has been a member, partner or
21042104 shareholder of the pass-through entity in the
21052105 tier immediately below it for an uninterrupted
21062106 period of not less than three (3) years.
21072107 E. The Oklahoma adjusted gross income of any individual
21082108 taxpayer shall be further adjusted as follows to arrive at Oklahoma
21092109 taxable income:
21102110
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21612161 1. a. In For tax year 2025 and previous tax years, in the
21622162 case of individuals, there shall be added or deducted,
21632163 as the case may be, the difference necessary to allow
21642164 personal exemptions of One Thousand Dollars
21652165 ($1,000.00) in lieu of the personal exempt ions allowed
21662166 by the Internal Revenue Code of 1986, as amended.
21672167 b. For tax year 2026 and subsequent tax years, in the
21682168 case of individuals, there shall be added or deducted,
21692169 as the case may be, the difference necessary to allow
21702170 personal exemptions of One Thousand Dollars
21712171 ($1,000.00) for the taxpayer and spouse and Five
21722172 Thousand Dollars ($5,000.00) for each dependent in
21732173 lieu of the personal exemptions allowed by the
21742174 Internal Revenue Code of 1986, as amended.
21752175 c. There shall be allowed an additional exemption of One
21762176 Thousand Dollars ($1,000.00) for each taxpayer or
21772177 spouse who is blind at the close of the tax year. For
21782178 purposes of this subparagraph, an individual is blind
21792179 only if the central visual acuity of the individual
21802180 does not exceed 20/200 in the better eye with
21812181 correcting lenses, or if the visual acuity of the
21822182 individual is greater than 20/200, but is accompanied
21832183 by a limitation in the fields of vision such that the
21842184
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22352235 widest diameter of the visual field subtends an angle
22362236 no greater than twenty (20) degrees.
22372237 c. d. There shall be allowed an additional exemption of One
22382238 Thousand Dollars ($1,000.00) for each taxpayer or
22392239 spouse who is sixty-five (65) years of age or older at
22402240 the close of the tax year based upon the filing status
22412241 and federal adjusted gross income of the taxpayer.
22422242 Taxpayers with the following filing status may claim
22432243 this exemption if the federal adjusted gross income
22442244 does not exceed:
22452245 (1) Twenty-five Thousand Dollars ($25,000.00) if
22462246 married and filing jointly,
22472247 (2) Twelve Thousand Five Hundred Dollars ( $12,500.00)
22482248 if married and filing separately,
22492249 (3) Fifteen Thousand Dollars ($15,000.00) if single,
22502250 and
22512251 (4) Nineteen Thousand Dollars ($19,000.00) if a
22522252 qualifying head of household.
22532253 Provided, for taxable years beginning after December
22542254 31, 1999, amounts incl uded in the calculation of
22552255 federal adjusted gross income pursuant to the
22562256 conversion of a traditional individual retirement
22572257 account to a Roth individual retirement account shall
22582258 be excluded from federal adjusted gross income for
22592259
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23102310 purposes of the income thres holds provided in this
23112311 subparagraph.
23122312 2. a. For taxable years beginning on or before December 31,
23132313 2005, in the case of individuals who use the standard
23142314 deduction in determining taxable income, there shall
23152315 be added or deducted, as the case may be, the
23162316 difference necessary to allow a standard deduction in
23172317 lieu of the standard deduction allowed by the Internal
23182318 Revenue Code of 1986, as amended, in an amount equal
23192319 to the larger of fifteen percent (15%) of the Oklahoma
23202320 adjusted gross income or One Thousand Dollars
23212321 ($1,000.00), but not to exceed Two Thousand Dollars
23222322 ($2,000.00), except that in the case of a married
23232323 individual filing a separate return such deduction
23242324 shall be the larger of fifteen percent (15%) of such
23252325 Oklahoma adjusted gross income or Five Hundred Do llars
23262326 ($500.00), but not to exceed the maximum amount of One
23272327 Thousand Dollars ($1,000.00).
23282328 b. For taxable years beginning on or after January 1,
23292329 2006, and before January 1, 2007, in the case of
23302330 individuals who use the standard deduction in
23312331 determining taxable income, there shall be added or
23322332 deducted, as the case may be, the difference necessary
23332333 to allow a standard deduction in lieu of the standard
23342334
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23852385 deduction allowed by the Internal Revenue Code of
23862386 1986, as amended, in an amount equal to:
23872387 (1) Three Thousand Dollars ($3,000.00), if the filing
23882388 status is married filing joint, head of hous ehold
23892389 or qualifying widow, or
23902390 (2) Two Thousand Dollars ($2,000.00), if the filing
23912391 status is single or married filing separate.
23922392 c. For the taxable year beginning on January 1, 200 7, and
23932393 ending December 31, 2007, in the case of individuals
23942394 who use the standard deduction in determining taxable
23952395 income, there shall be added or deducted, as the case
23962396 may be, the difference necessary to allow a standard
23972397 deduction in lieu of the standard d eduction allowed by
23982398 the Internal Revenue Code of 1986, as amended, in an
23992399 amount equal to:
24002400 (1) Five Thousand Five Hundred Dollars ($5,500.00),
24012401 if the filing status is married filing joint or
24022402 qualifying widow, or
24032403 (2) Four Thousand One Hundred Twenty -five Dollars
24042404 ($4,125.00) for a head of household, or
24052405 (3) Two Thousand Seven Hundred Fifty Dollars
24062406 ($2,750.00), if the filing status is single or
24072407 married filing separate.
24082408
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24592459 d. For the taxable year beginning on January 1, 2008, and
24602460 ending December 31, 2008, in the cas e of individuals
24612461 who use the standard deduction in determining taxable
24622462 income, there shall be added or deducted, as the case
24632463 may be, the difference necessary to allow a standard
24642464 deduction in lieu of the standard deduction allowed by
24652465 the Internal Revenue Co de of 1986, as amended, in an
24662466 amount equal to:
24672467 (1) Six Thousand Five Hundred Dollars ($6,500.00), if
24682468 the filing status is married filing joint or
24692469 qualifying widow,
24702470 (2) Four Thousand Eight Hundred Seventy -five Dollars
24712471 ($4,875.00) for a head of household, or
24722472 (3) Three Thousand Two Hundred Fifty Dollars
24732473 ($3,250.00), if the filing statu s is single or
24742474 married filing separate.
24752475 e. For the taxable year beginning on January 1, 2009, and
24762476 ending December 31, 2009, in the case of individuals
24772477 who use the standard deduct ion in determining taxable
24782478 income, there shall be added or deducted, as the case
24792479 may be, the difference necessary to allow a standard
24802480 deduction in lieu of the standard deduction allowed by
24812481 the Internal Revenue Code of 1986, as amended, in an
24822482 amount equal to:
24832483
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25342534 (1) Eight Thousand Five Hundred Dollars ($8,500.00),
25352535 if the filing status i s married filing joint or
25362536 qualifying widow,
25372537 (2) Six Thousand Three Hundred Seventy -five Dollars
25382538 ($6,375.00) for a head of household, or
25392539 (3) Four Thousand Two Hundred Fifty Dollar s
25402540 ($4,250.00), if the filing status is single or
25412541 married filing separate.
25422542 Oklahoma adjusted gross income shall be increased by
25432543 any amounts paid for motor vehicle excise taxes which
25442544 were deducted as allowed by the Internal Revenue Code
25452545 of 1986, as amended.
25462546 f. For taxable years beginning on or after January 1,
25472547 2010, and ending on Dece mber 31, 2016, in the case of
25482548 individuals who use the standard deduction in
25492549 determining taxable income, there shall be added or
25502550 deducted, as the case may be, the difference neces sary
25512551 to allow a standard deduction equal to the standard
25522552 deduction allowed by the Internal Revenue Code of
25532553 1986, as amended, based upon the amount and filing
25542554 status prescribed by such Code for purposes of filing
25552555 federal individual income tax returns.
25562556 g. For Except as provided for in subparagraph s h and i of
25572557 this paragraph, for taxable years beginning on or
25582558
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26092609 after January 1, 2017, in the case of individuals who
26102610 use the standard deduction in determining taxable
26112611 income, there shall be added or deducted, as the case
26122612 may be, the difference necessary to allow a standard
26132613 deduction in lieu of the standard deduction allowed by
26142614 the Internal Revenue Code of 1986, as amended, as
26152615 follows:
26162616 (1) Six Thousand Three Hundred Fifty Dollars
26172617 ($6,350.00) for single or married filin g
26182618 separately,
26192619 (2) Twelve Thousand Seven Hundred Dollars
26202620 ($12,700.00) for marri ed filing jointly or
26212621 qualifying widower with dependent child, and
26222622 (3) Nine Thousand Three Hundred Fifty Dollars
26232623 ($9,350.00) for head of household.
26242624 h. For tax year 2026 and subseq uent tax years, in the
26252625 case of individual women who are at least twenty -five
26262626 (25) years of age and less than thirty (30) years of
26272627 age by the end of the calendar year corresponding to
26282628 the tax year, who claim a dependent, and who use the
26292629 standard deduction i n determining taxable income,
26302630 there shall be added or deducted, as the case ma y be,
26312631 the difference necessary to allow a standard deduction
26322632 in lieu of the standard deduction allowed by the
26332633
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26842684 Internal Revenue Code of 1986, as amended, equal to
26852685 the amount determined by the United States Department
26862686 of Housing and Urban Development to be the estimated
26872687 median income of this state for the year preceding the
26882688 corresponding tax year or the amount allowed pursuant
26892689 to subparagraph g of this paragraph, whichever is
26902690 greater. Women who qualify for the standard deduction
26912691 provided by this paragraph an d file as married filing
26922692 jointly are allowed the deduction provided by this
26932693 paragraph or subparagraph g of this paragraph,
26942694 whichever is greater.
26952695 i. Except as provided for in subp aragraph h of this
26962696 paragraph, for tax year 2026 and subsequent tax years,
26972697 in the case of individuals who file married filing
26982698 jointly, who were married in the calendar year of the
26992699 corresponding tax year or the preceding calendar year,
27002700 and who use the standard deduction in determining
27012701 taxable income, there shall be added or deducted, as
27022702 the case may be, the difference necessary to allow a
27032703 standard deduction in lieu of the standard deduction
27042704 allowed by the Internal Revenue Code of 1986, as
27052705 amended, equal to fi fty percent (50%) of the amount
27062706 determined by the United States Department of Housing
27072707 and Urban Development to be the estimated median
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27592759 income of this state for the year preceding the
27602760 corresponding tax year or the amount allowed pursuant
27612761 to subparagraph g of this paragraph, whichever is
27622762 greater.
27632763 3. a. In the case of resident and part -year resident
27642764 individuals having adjusted gross income from sources
27652765 both within and without the state, the itemized or
27662766 standard deductions and personal exemptions shall be
27672767 reduced to an amount which is the same portion of the
27682768 total thereof as Oklahoma adjusted gross income is of
27692769 adjusted gross income. To the extent itemized
27702770 deductions include allowable moving expense, proration
27712771 of moving expense shall not be required or permitte d
27722772 but allowable moving expense shall be fully deductible
27732773 for those taxpayers m oving within or into Oklahoma
27742774 this state and no part of moving expense shall be
27752775 deductible for those taxpayers moving without or out
27762776 of Oklahoma this state. All other itemized o r
27772777 standard deductions and personal exemptions shall be
27782778 subject to proration as provided by law.
27792779 b. For taxable years beginning on or after January 1,
27802780 2018, the net amount of itemized deductions allowable
27812781 on an Oklahoma income tax return, subject to the
27822782 provisions of paragraph 24 of this subsection, shall
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28342834 not exceed Seventeen Thousan d Dollars ($17,000.00).
28352835 For purposes of this subparagraph, charitable
28362836 contributions and medical expenses deductible for
28372837 federal income tax purposes shall be excluded from the
28382838 amount of Seventeen Thousand Dollars ($17,000.00) as
28392839 specified by this subparagraph.
28402840 4. A resident individual with a physical disability
28412841 constituting a substantial handicap to employment may deduct from
28422842 Oklahoma adjusted gross income such expenditures to mo dify a motor
28432843 vehicle, home or workplace as are necessary to compensate for his or
28442844 her handicap. A veteran certified by the United States Department
28452845 of Veterans Affairs of the federal government as having a service -
28462846 connected disability shall be conclusivel y presumed to be an
28472847 individual with a physical disability constituting a substantial
28482848 handicap to employment. The Tax Commission shall promulgate rules
28492849 containing a list of combinations of common disabilities and
28502850 modifications which may be presumed to qual ify for this deduction.
28512851 The Tax Commission shall prescribe necessary requirem ents for
28522852 verification.
28532853 5. a. Before July 1, 2010, the first One Thousand Five
28542854 Hundred Dollars ($1,500.00) received by any person
28552855 from the United States as salary or compensation in
28562856 any form, other than retirement benefits, as a member
28572857
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29082908 of any component of the Armed Forces of the United
29092909 States shall be deducted from taxable income.
29102910 b. On or after July 1, 2010, one hundred percent (100%)
29112911 of the income received by any person from the United
29122912 States as salary or compensation in any form, other
29132913 than retirement benefits, as a member of any component
29142914 of the Armed Forces of the United States shall be
29152915 deducted from taxable income.
29162916 c. Whenever the filing of a timely income tax return by a
29172917 member of the Armed Forces of the United States is
29182918 made impracticable or impossible of accomplishment by
29192919 reason of:
29202920 (1) absence from the United States, which term
29212921 includes only the states and the District of
29222922 Columbia,
29232923 (2) absence from the State of Oklahoma this state
29242924 while on active duty, or
29252925 (3) confinement in a hospital within the Unit ed
29262926 States for treatment of wounds, injuries or
29272927 disease,
29282928 the time for filing a return and paying an income tax
29292929 shall be and is hereby extended without incurring
29302930 liability for interest or penalties, to the fifteenth
29312931 day of the third month following the month in which:
29322932
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29832983 (a) Such individual shall return to the United
29842984 States if the extension is granted pursuant
29852985 to subparagraph a division 1 of this
29862986 paragraph subparagraph, return to the State
29872987 of Oklahoma this state if the extension is
29882988 granted pursuant to subparagraph b division
29892989 2 of this paragraph subparagraph or be
29902990 discharged from such hospital if the
29912991 extension is granted pursuant to
29922992 subparagraph c division 3 of this paragraph
29932993 subparagraph, or
29942994 (b) An executor, administrator, or conservator
29952995 of the estate of the taxpayer is appointed,
29962996 whichever event occurs the earliest.
29972997 Provided, that the Tax Commission may, in its discretion, grant
29982998 any member of the Armed Forces of the United States an ext ension of
29992999 time for filing of income tax returns and payment of income tax
30003000 without incurring liabilities for interest or penalties. Such
30013001 extension may be granted only when in the judgment of the Tax
30023002 Commission a good cause exists therefor and may be for a period in
30033003 excess of six (6) months. A record of every such extension granted,
30043004 and the reason therefor, shall be kept.
30053005 6. Before July 1, 2010, the salary or any other form of
30063006 compensation, received from the United States by a member of any
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30583058 component of the Armed Forces of the United States, shall be
30593059 deducted from taxable income dur ing the time in which the person is
30603060 detained by the enemy in a conflict, is a prisoner of war or is
30613061 missing in action and not deceased; provided, after July 1, 2010,
30623062 all such salary or compensation shall be subject to the deduction as
30633063 provided pursuant to paragraph 5 of this subsection.
30643064 7. a. An individual taxpayer, whether resident or
30653065 nonresident, may deduct an amount equal to the federal
30663066 income taxes paid by the taxpayer during the taxable
30673067 year.
30683068 b. Federal taxes as described in subparagraph a of this
30693069 paragraph shall be deductible by any individual
30703070 taxpayer, whether resident or nonresident, only to the
30713071 extent they relate to income subject to taxation
30723072 pursuant to the provisions of the Oklahoma Income Tax
30733073 Act. The maximum amount allowable in the preceding
30743074 paragraph 5 of this subsection shall be prorated on
30753075 the ratio of the Oklahoma adjusted gross income to
30763076 federal adjusted gross income.
30773077 c. For the purpose of this paragraph, “federal income
30783078 taxes paid” shall mean federal income taxes, surtaxes
30793079 imposed on incomes or excess profits taxes, as though
30803080 the taxpayer was on the accrual basis. In determining
30813081 the amount of deduction for federal income taxes for
30823082
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31333133 tax year 2001, the amount of the deduction shall not
31343134 be adjusted by the amount of any accelerated ten
31353135 percent (10%) tax rate bracket credit or advanced
31363136 refund of the credit received during the tax year
31373137 provided pursuant to the federal Economic Growth and
31383138 Tax Relief Reconciliation Act of 2001, P.L. No. 107-
31393139 16, and the advanced refund of such credit shall not
31403140 be subject to taxation.
31413141 d. The provisions of this paragraph shall apply to all
31423142 taxable years ending after December 31, 1978, and
31433143 beginning before January 1, 2006.
31443144 8. Retirement benefi ts not to exceed Five Thousand Five Hundred
31453145 Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five
31463146 Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand
31473147 Dollars ($10,000.00) for the 2006 tax year and all subsequent tax
31483148 years, which are received by an individual from the civil service of
31493149 the United States, the Ok lahoma Public Employees Retirement System,
31503150 the Teachers’ Retirement System of Oklahoma, the Oklahoma Law
31513151 Enforcement Retirement System, the Oklahoma Firefighters Pension and
31523152 Retirement System, the Oklahoma Police Pension and Retirement
31533153 System, the employee retirement systems created by counties pursuant
31543154 to Section 951 et seq. of Title 19 of the Oklahoma Statutes, the The
31553155 Uniform Retirement System for Justices and Judges, the Oklah oma
31563156 Wildlife Conservation Department Retirement Fund, the Oklahoma
31573157
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32083208 Employment Security Commission Retirement Plan, or the employee
32093209 retirement systems created by municipalities pursuant to Section 48 -
32103210 101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt
32113211 from taxable income.
32123212 9. In taxable years beginning after December 3l, 1984, Social
32133213 Security benefits received by an individual shall be exempt from
32143214 taxable income, to the extent such benefits are included in the
32153215 federal adjusted gross income pursu ant to the provisions of Section
32163216 86 of the Internal Revenue Code of 1986, as amended, 26 U.S.C.,
32173217 Section 86.
32183218 10. For taxable years beginning after December 31, 1994, lump -
32193219 sum distributions from employer plans of deferred compensation,
32203220 which are not qualif ied plans within the meaning of Section 401(a)
32213221 of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section
32223222 401(a), and which are deposited in and accounted for within a
32233223 separate bank account or brokerage account in a financial
32243224 institution within t his state, shall be excluded from taxable income
32253225 in the same manner as a quali fying rollover contribution to an
32263226 individual retirement account within the meaning of Section 408 of
32273227 the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section
32283228 408. Amounts withdrawn from such bank or brokerage account,
32293229 including any earnings thereon, shall be included in taxable income
32303230 when withdrawn in the same manner as withdrawals from individual
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32823282 retirement accounts within the meaning of Section 408 of the
32833283 Internal Revenue Code of 1986, as amended.
32843284 11. In taxable years beginning after December 31, 1995,
32853285 contributions made to and interest received from a medical savings
32863286 account established pursuant to Sections 2621 through 2623 of Title
32873287 63 of the Oklahoma Statutes shall be exempt from taxable income.
32883288 12. For taxable years beginning after December 31, 1996, the
32893289 Oklahoma adjusted gross income of any individual taxpayer who is a
32903290 swine or poultry producer may be further adjusted for the deduction
32913291 for depreciation allowed fo r new construction or expansion costs
32923292 which may be computed using the same dep reciation method elected for
32933293 federal income tax purposes except that the useful life shall be
32943294 seven (7) years for purposes of this paragraph. If depreciation is
32953295 allowed as a deduction in determining the adjusted gross income of
32963296 an individual, any depreciation calculated and claimed pursuant to
32973297 this section shall in no event be a duplication of any depreciation
32983298 allowed or permitted on the federal income tax return of the
32993299 individual.
33003300 13. a. In taxable years beginning before January 1, 2005,
33013301 retirement benefits not to exceed the amounts
33023302 specified in this paragraph, which are received by an
33033303 individual sixty-five (65) years of age or older and
33043304 whose Oklahoma adjusted gross income is Tw enty-five
33053305 Thousand Dollars ($25,000.00) or less if the filing
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33573357 status is single, head of household, or married filing
33583358 separate, or Fifty Thousand Dollars ($50,000.00) or
33593359 less if the filing status is married filing joint or
33603360 qualifying widow, shall be exempt from taxable income.
33613361 In taxable years beginning after December 31, 2004,
33623362 retirement benefits not to exceed the amounts
33633363 specified in this paragraph, which are received by an
33643364 individual whose Oklahoma adjusted gross income is
33653365 less than the qualifying amount specified in this
33663366 paragraph, shall be exempt from taxable income.
33673367 b. For purposes of this paragraph, the qualifying amount
33683368 shall be as follows:
33693369 (1) in taxable years beginning after December 31,
33703370 2004, and prior to January 1, 2007, the
33713371 qualifying amount sha ll be Thirty-seven Thousand
33723372 Five Hundred Dollars ($37,500.00) or less if the
33733373 filing status is single, head of household, or
33743374 married filing separate, or Seventy -five Thousand
33753375 Dollars ($75,000.00) or less if the filing status
33763376 is married filing jointly or qua lifying widow,
33773377 (2) in the taxable year beginning January 1, 2007,
33783378 the qualifying amount shall be Fifty Thousand
33793379 Dollars ($50,000.00) or less if the filing status
33803380 is single, head of household, or married filing
33813381
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34323432 separate, or One Hundred Thousand Dollars
34333433 ($100,000.00) or less if the filing status is
34343434 married filing jointly or qualifying widow,
34353435 (3) in the taxable year beginning January 1, 2008,
34363436 the qualifying amount shall be Sixty -two Thousand
34373437 Five Hundred Dollars ($62,500.00) or less if the
34383438 filing status is sin gle, head of household, or
34393439 married filing separate, or One Hundred Twenty -
34403440 five Thousand Dollars ($125,000.00) or less if
34413441 the filing status is married filing jointly or
34423442 qualifying widow,
34433443 (4) in the taxable year beginning January 1, 2009,
34443444 the qualifying amount shall be One Hundred
34453445 Thousand Dollars ($100,000.00) or less if the
34463446 filing status is single, head of household, or
34473447 married filing separate, or Two Hundred Thousand
34483448 Dollars ($200,000.00) or less if the filing
34493449 status is married filing jointly or qualifying
34503450 widow, and
34513451 (5) in the taxable year beginning January 1, 2010,
34523452 and subsequent taxable years, there shall be no
34533453 limitation upon the qualifying amount.
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35053505 c. For purposes of this paragraph, “retirement benefits”
35063506 means the total distributions or withdrawals from the
35073507 following:
35083508 (1) an employee pension benefit plan which satisfies
35093509 the requirements of Section 401 of the Internal
35103510 Revenue Code of 1986, as amended, 26 U.S.C.,
35113511 Section 401,
35123512 (2) an eligible deferred compensation plan that
35133513 satisfies the requirements of Sec tion 457 of the
35143514 Internal Revenue Code of 1986, as amended, 26
35153515 U.S.C., Section 457,
35163516 (3) an individual retirement account, annuity or
35173517 trust or simplified employee pension that
35183518 satisfies the requirements of Section 408 of the
35193519 Internal Revenue Code of 1986, as amended, 26
35203520 U.S.C., Section 408,
35213521 (4) an employee annuity subject to the provi sions of
35223522 Section 403(a) or (b) of the Internal Revenue
35233523 Code of 1986, as amended, 26 U.S.C., Section
35243524 403(a) or (b),
35253525 (5) United States Retirement Bonds which satisfy the
35263526 requirements of Section 86 of the Internal
35273527 Revenue Code of 1986, as amended, 26 U.S.C.,
35283528 Section 86, or
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35803580 (6) lump-sum distributions from a retirement plan
35813581 which satisfies the requirements of Section
35823582 402(e) of the Internal Revenue Code of 1986, as
35833583 amended, 26 U.S.C., Section 402(e).
35843584 d. The amount of the exemption provided by this paragraph
35853585 shall be limited to Five Thousand Five Hundred Dollars
35863586 ($5,500.00) for the 2004 tax year, Seven Thousand Five
35873587 Hundred Dollars ($7,500.00) for the 2005 tax year and
35883588 Ten Thousand Dollars ($10,000.00) for the tax year
35893589 2006 and for all subsequent tax years. Any individual
35903590 who claims the exemption provided for in paragraph 8
35913591 of this subsection shall not be permitted to claim a
35923592 combined total exemption pursuant to this paragraph
35933593 and paragraph 8 of this subsection in an amount
35943594 exceeding Five Thousand Five Hundred Doll ars
35953595 ($5,500.00) for the 2004 tax year, Seven Thousand Five
35963596 Hundred Dollars ($7,500.00) for the 2005 tax year and
35973597 Ten Thousand Dollars ($10,000.00) for the 2006 tax
35983598 year and all subsequent tax years.
35993599 14. In taxable years beginning after December 31, 1999, for an
36003600 individual engaged in production agriculture who has filed a
36013601 Schedule F form with the taxpayer ’s federal income tax return for
36023602 such taxable year, there shall be excluded f rom taxable income any
36033603 amount which was included as federal taxable income or federal
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36553655 adjusted gross income and which consists of the discharge of an
36563656 obligation by a creditor of the taxpayer incurred to finance the
36573657 production of agricultural products.
36583658 15. In taxable years beginning December 31, 2000, an amount
36593659 equal to one hundred percent (100%) of the amount of any scholarship
36603660 or stipend received from participation in the Oklahoma Police Corps
36613661 Program, as established in Section 2 -140.3 of Title 47 of the
36623662 Oklahoma Statutes shall be exempt from taxable income.
36633663 16. a. In taxable years beginning after December 31, 2001,
36643664 and before January 1, 2005, there shall be allowed a
36653665 deduction in the amount of contributions to accounts
36663666 established pursuant to the Oklahoma College Savings
36673667 Plan Act. The deduction shall equal the amount of
36683668 contributions to accounts, but in no event shall the
36693669 deduction for each contributor exceed Two Thousand
36703670 Five Hundred Dollars ($2,500.00) each taxable year for
36713671 each account.
36723672 b. In taxable years beginning after December 31, 2004,
36733673 each taxpayer shall be allowed a deduc tion for
36743674 contributions to accounts established pursuant to the
36753675 Oklahoma College Savings Plan Act. The maximum annual
36763676 deduction shall equal the amount of contributions to
36773677 all such accounts plus any contributions to such
36783678 accounts by the taxpayer for prior taxable years after
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37303730 December 31, 2004, which were not deducted, but in no
37313731 event shall the deduction for each tax year exceed Ten
37323732 Thousand Dollars ($10,000.00) for each individual
37333733 taxpayer or Twenty Thousand Dollars ($20,000.00) for
37343734 taxpayers filing a joint return. Any amount of a
37353735 contribution that is not deducted by the taxpayer in
37363736 the year for which the contribution is made may be
37373737 carried forward as a deduction from income for th e
37383738 succeeding five (5) years. For taxable years
37393739 beginning after December 31, 2005, deductions may be
37403740 taken for contributions and rollovers made during a
37413741 taxable year and up to April 15 of the succeeding
37423742 year, or the due date of a taxpayer ’s state income tax
37433743 return, excluding extensions, whichever is later.
37443744 Provided, a deduction for the same contribution may
37453745 not be taken for two (2) different taxable years.
37463746 c. In taxable years beginning after December 31, 2006,
37473747 deductions for contributions made pursuant to
37483748 subparagraph b of this paragraph shall be limited as
37493749 follows:
37503750 (1) for a taxpayer who qualified for the five -year
37513751 carryforward election and who takes a rollover or
37523752 nonqualified withdrawal during that period, the
37533753 tax deduction otherwise available pursuant to
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38053805 subparagraph b of this paragraph shall be reduced
38063806 by the amount which is equa l to the rollover or
38073807 nonqualified withdrawal, and
38083808 (2) for a taxpayer who elects to take a rollover or
38093809 nonqualified withdrawal within the same tax year
38103810 in which a contribution was made to the
38113811 taxpayer’s account, the tax deduction otherwise
38123812 available pursuant to subparagraph b of this
38133813 paragraph shall be reduced by the amount of the
38143814 contribution which is equal to the rollover or
38153815 nonqualified withdrawal.
38163816 d. If a taxpayer elects to tak e a rollover on a
38173817 contribution for which a deduction has been taken
38183818 pursuant to subparagraph b of this paragraph within
38193819 one (1) year of the date of contribution, the amount
38203820 of such rollover shall be included in the adjusted
38213821 gross income of the taxpayer in the taxable year of
38223822 the rollover.
38233823 e. If a taxpayer makes a nonqualified withdrawal of
38243824 contributions for which a deduction was taken pursuant
38253825 to subparagraph b of this paragraph, such nonqualified
38263826 withdrawal and any earnings thereon shall be included
38273827 in the adjusted gross income of the taxpayer in the
38283828 taxable year of the nonqualified withdrawal.
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38803880 f. As used in this paragraph:
38813881 (1) “non-qualified withdrawal ” means a withdrawal
38823882 from an Oklahoma College Savings Plan account
38833883 other than one of the following:
38843884 (a) a qualified withdrawal,
38853885 (b) a withdrawal made as a result of the death
38863886 or disability of the designated beneficiary
38873887 of an account,
38883888 (c) a withdrawal that is made on the account of
38893889 a scholarship or the allowance or payment
38903890 described in Section 135(d)(1)(B) or ( C) or
38913891 by the Internal Revenue Code of 1986, as
38923892 amended, received by the design ated
38933893 beneficiary to the extent the amount of the
38943894 refund does not exceed the amount of the
38953895 scholarship, allowance, or payment, or
38963896 (d) a rollover or change of designated
38973897 beneficiary as permitted by subsection F of
38983898 Section 3970.7 of Title 70 of the Oklahoma
38993899 Statutes, and
39003900 (2) “rollover” means the transfer of funds from the
39013901 Oklahoma College Savings Plan to any other plan
39023902 under Section 529 of the Internal Revenue Code of
39033903 1986, as amended.
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39553955 17. For tax years 2006 through 2021, retirement benefits
39563956 received by an individual from any component of the Armed Forces of
39573957 the United States in an amount not to exceed the greater of seventy -
39583958 five percent (75%) of such benefits or Ten Thousand Dollars
39593959 ($10,000.00) shall be exempt from taxable income but in no case less
39603960 than the amount of the exemption provided by paragraph 13 of this
39613961 subsection. For tax year 2022 and subsequent tax years, retirement
39623962 benefits received by an individual from any componen t of the Armed
39633963 Forces of the United States shall be exempt from taxable income .
39643964 18. For taxable years beginning after December 31, 2006,
39653965 retirement benefits received by federal civil service retirees,
39663966 including survivor annuities, paid in lieu of Social S ecurity
39673967 benefits shall be exempt from taxable income to the extent such
39683968 benefits are included in the federal adjusted gross income pursuant
39693969 to the provisions of Section 86 of the Internal Revenue Code of
39703970 1986, as amended, 26 U.S.C., Section 86, according t o the following
39713971 schedule:
39723972 a. in the taxable year beginning January 1, 2007, tw enty
39733973 percent (20%) of such benefits shall be exempt,
39743974 b. in the taxable year beginning January 1, 2008, forty
39753975 percent (40%) of such benefits shall be exempt,
39763976 c. in the taxable year beginning January 1, 2009, sixty
39773977 percent (60%) of such benefits shall be exempt,
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40294029 d. in the taxable year beginning January 1, 2010, eighty
40304030 percent (80%) of such benefits shall be exempt, and
40314031 e. in the taxable year beginning January 1, 2011, and
40324032 subsequent taxable years, one hundred percent (100%)
40334033 of such benefits shall be exempt.
40344034 19. a. For taxable years beginning after December 31, 2007, a
40354035 resident individual may deduct up to Ten Thousand
40364036 Dollars ($10,000.00) from Oklahoma adjusted gross
40374037 income if the individual, or the dependent of the
40384038 individual, while living, donates one or more human
40394039 organs of the individual to another human being for
40404040 human organ transplantation. As used in this
40414041 paragraph, “human organ” means all or part of a liver,
40424042 pancreas, kidney, intestine, lung, or bone marrow. A
40434043 deduction that is claimed under this parag raph may be
40444044 claimed in the taxable year in which the human organ
40454045 transplantation occurs.
40464046 b. An individual may claim this deduction only once, and
40474047 the deduction may be claimed onl y for unreimbursed
40484048 expenses that are incurred by the individual and
40494049 related to the organ donation of the individual.
40504050 c. The Oklahoma Tax Commission shall promulgate rules to
40514051 implement the provisions of this paragraph which shall
40524052 contain a specific list of expenses which may be
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41044104 presumed to qualify for the deduction. The Tax
41054105 Commission shall prescribe necessary requirements for
41064106 verification.
41074107 20. For taxable years beginning after December 31, 2009, there
41084108 shall be exempt from taxable income any amount receive d by the
41094109 beneficiary of the death benefit for an emergency medical technician
41104110 or a registered emergency medical responder provided by Section 1 -
41114111 2505.1 of Title 63 of the Oklahoma Statutes.
41124112 21. For taxable years beginning after December 31, 2008,
41134113 taxable income shall be increased by any unemployment compensation
41144114 exempted under Secti on 85(c) of the Internal Revenue Code of 1986,
41154115 as amended, 26 U.S.C., Section 85(c) (2009).
41164116 22. For taxable years beginning after December 31, 2008, there
41174117 shall be exempt from ta xable income any payment in an amount less
41184118 than Six Hundred Dollars ($600.00) received by a person as an award
41194119 for participation in a competitive livestock show event. For
41204120 purposes of this paragraph, the payment shall be treated as a
41214121 scholarship amount pa id by the entity sponsoring the event and the
41224122 sponsoring entity shall cause th e payment to be categorized as a
41234123 scholarship in its books and records.
41244124 23. For taxable years beginning on or after January 1, 2016,
41254125 taxable income shall be increased by any amou nt of state and local
41264126 sales or income taxes deducted under 26 U.S.C., Section 164 of the
41274127 Internal Revenue Code of 1986, as amended. If the amount of state
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41794179 and local taxes deducted on the federal return is limited, taxable
41804180 income on the state return shall be increased only by the amount
41814181 actually deducted after any such limitations a re applied.
41824182 24. For taxable years beginning after December 31, 2020, each
41834183 taxpayer shall be allowed a deduction for contributions to accounts
41844184 established pursuant to the Achievi ng a Better Life Experience
41854185 (ABLE) Program program as established in Section 4001.1 et seq. of
41864186 Title 56 of the Oklahoma Statutes. For any tax year, the deduction
41874187 provided for in this paragraph shall not exceed Ten Thousand Dollars
41884188 ($10,000.00) for an indi vidual taxpayer or Twenty Thousand Dollars
41894189 ($20,000.00) for taxpayers filing a joint return. Any amount of
41904190 contribution not deducted by the taxpayer in the tax year for which
41914191 the contribution is made may be carried forward as a deduction from
41924192 income for up to five (5) tax years. Deductions may be taken for
41934193 contributions made during the tax year and through April 15 of the
41944194 succeeding tax year, or through the due date of a taxpayer ’s state
41954195 income tax return excluding extensions, whichever is later.
41964196 Provided, a deduction for the same contribution may not be taken in
41974197 more than one (1) tax year.
41984198 25. For tax year 2026 and subsequent tax years, income earned
41994199 by women who have given birth to at least four (4) children and have
42004200 claimed the children as dependent s until the time that the
42014201 dependents turn eighteen (18) years of age , by women who adopt or
42024202 become the legal guardian of at least four (4) children before the
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42544254 children turn thirteen (13) years of age and have claimed the
42554255 children as dependents until the time that the dependents turn
42564256 eighteen (18) years of age, or by a combination of b oth shall be
42574257 exempt from taxable income. For women who would otherwise qualify
42584258 for the exemption provided by this paragraph and file as married
42594259 filing jointly, the income earned by both taxpayers shall be exempt.
42604260 26. For tax year 2026 and subsequent tax years, income ear ned
42614261 by individuals less than twenty -five (25) years of age by the end of
42624262 the calendar year corresponding to the tax year shall be exempt from
42634263 taxable income.
42644264 F. 1. For taxable years beginning after December 31, 2004, a
42654265 deduction from the Oklahoma adjusted gross income of any individual
42664266 taxpayer shall be allowed for qualifying gains receiving capital
42674267 treatment that are included in the federal adjusted gross incom e of
42684268 such individual taxpayer during the taxable year.
42694269 2. As used in this subsection:
42704270 a. “qualifying gains receiving capital treatment ” means
42714271 the amount of net capital gains, as defined in Section
42724272 1222(11) of the Internal Revenue Code of 1986, as
42734273 amended, included in an individual taxpayer ’s federal
42744274 income tax return that result fr om:
42754275 (1) the sale of real property or tangible personal
42764276 property located within Oklahoma this state that
42774277 has been directly or indirectly owned by the
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43294329 individual taxpayer for a hol ding period of at
43304330 least five (5) years prior to the date of the
43314331 transaction from which such net capital gains
43324332 arise,
43334333 (2) the sale of stock or the sale of a direct or
43344334 indirect ownership interest in an Oklahoma
43354335 company, limited liability company, or
43364336 partnership where such stock or ownership
43374337 interest has been directly or indirectly own ed by
43384338 the individual taxpayer for a holding period of
43394339 at least two (2) years prior to the date of the
43404340 transaction from which the net capital gains
43414341 arise, or
43424342 (3) the sale of real property, tangible personal
43434343 property or intangible personal property located
43444344 within Oklahoma this state as part of the sale of
43454345 all or substantially all of the assets of an
43464346 Oklahoma company, limited liability company, or
43474347 partnership or an Oklahoma proprieto rship
43484348 business enterprise where such property has been
43494349 directly or indirectly owned by such entity or
43504350 business enterprise or owned by the owners of
43514351 such entity or business enterprise for a period
43524352 of at least two (2) years prior to the date of
43534353
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44044404 the transaction from which the net capital gains
44054405 arise,
44064406 b. “holding period” means an uninterrupted period of
44074407 time. The holding period shall include any additional
44084408 period when the property was held by another
44094409 individual or entity, if such additional period is
44104410 included in the taxpayer’s holding period for the
44114411 asset pursuant to the Internal Revenu e Code of 1986,
44124412 as amended,
44134413 c. “Oklahoma company,” “limited liability company, ” or
44144414 “partnership” means an entity whose primary
44154415 headquarters have been located in Oklahoma this state
44164416 for at least three (3) uninterrupted years prior to
44174417 the date of the transaction from which the net capital
44184418 gains arise,
44194419 d. “direct” means the individual taxpayer directly owns
44204420 the asset,
44214421 e. “indirect” means the individual taxpayer owns an
44224422 interest in a pass-through entity (or chain of pass -
44234423 through entities) that sells the asset t hat gives rise
44244424 to the qualifying gains receiving capital treatment.
44254425 (1) With respect to sales of real property or
44264426 tangible personal property located within
44274427 Oklahoma this state, the deduction described in
44284428
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44794479 this subsection shall not apply unless the pass -
44804480 through entity that makes the sale has held the
44814481 property for not less than five (5) uninterrupted
44824482 years prior to the date of the transaction that
44834483 created the capital gain, and each p ass-through
44844484 entity included in the chain of ownership has
44854485 been a member, partn er, or shareholder of the
44864486 pass-through entity in the tier immediately below
44874487 it for an uninterrupted period of not less than
44884488 five (5) years.
44894489 (2) With respect to sales of stock or ownership
44904490 interest in or sales of all or substantially all
44914491 of the assets of an Oklahoma company, limited
44924492 liability company, partnership or Oklahoma
44934493 proprietorship business enterprise, the deduction
44944494 described in this subsection shall not apply
44954495 unless the pass-through entity that makes the
44964496 sale has held the stock or ownership interest for
44974497 not less than two (2) uninterrupted years prior
44984498 to the date of the transaction that created the
44994499 capital gain, and each pass -through entity
45004500 included in the chain of ownership has been a
45014501 member, partner or shareholder of the pass -
45024502 through entity in the tier immediately below it
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45544554 for an uninterrupted period of not less than two
45554555 (2) years. For purposes of this division,
45564556 uninterrupted ownership prior to July 1, 2007,
45574557 shall be included in the determination of the
45584558 required holding period prescribed by this
45594559 division, and
45604560 f. “Oklahoma proprietorship business enterprise ” means a
45614561 business enterprise whose income and expenses have
45624562 been reported on Schedule C or F of an individual
45634563 taxpayer’s federal income tax return, or any similar
45644564 successor schedule published by the Internal Revenue
45654565 Service and whose primary headquarters have been
45664566 located in Oklahoma this state for at least three (3)
45674567 uninterrupted years prior to the date of the
45684568 transaction from which the net capital gains arise.
45694569 G. 1. For purposes of computing its Oklahoma taxable income
45704570 under this section, the dividends -paid deduction otherwise allowed
45714571 by federal law in computing net income of a real estate investment
45724572 trust that is subject to federal income tax shall be added back in
45734573 computing the tax imposed by this state under this title if the real
45744574 estate investment trust is a captive real estate investment trust.
45754575 2. For purposes of computing its Oklahoma taxable income under
45764576 this section, a taxpayer shall add back otherwise deductible rents
45774577 and interest expenses paid to a captive real estate investment trust
45784578
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46294629 that is not subject to the provisions of paragraph 1 of this
46304630 subsection. As used in this subsection:
46314631 a. the term “real estate investment trust” or “REIT”
46324632 means the meaning ascribed to such term in Section 856
46334633 of the Internal Revenue Code of 1986, as amended,
46344634 b. the term “captive real estate investment trust ” means
46354635 a real estate investment trust, the shares or
46364636 beneficial interests of which are not regularly traded
46374637 on an established securities market and more than
46384638 fifty percent (50%) of the voting power or value of
46394639 the beneficial interests or shares of which are owned
46404640 or controlled, directly or indirectly, or
46414641 constructively, by a sin gle entity that is:
46424642 (1) treated as an association taxable as a
46434643 corporation under the Internal Revenue Code of
46444644 1986, as amended, and
46454645 (2) not exempt from federal income tax pursuant to
46464646 the provisions of Section 501(a) of the Internal
46474647 Revenue Code of 1986, as amended.
46484648 The term shall not include a real estate investment
46494649 trust that is intended to be regularly traded on an
46504650 established securities market, and that satisfies the
46514651 requirements of Section 856(a)(5) and (6) of the U.S.
46524652 Internal Revenue Code of 1986, as amended, by reason
46534653
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47044704 of Section 856(h)(2) of the Internal Revenue Code of
47054705 1986, as amended,
47064706 c. the term “association taxable as a corporation ” shall
47074707 not include the following entities:
47084708 (1) any real estate investment trust as defined in
47094709 paragraph a of this su bsection other than a
47104710 “captive real estate investment trust ” captive
47114711 real estate investment trust,
47124712 (2) any qualified real estate investment trust
47134713 subsidiary under Section 856(i) of the Internal
47144714 Revenue Code of 1986, as amended, other than a
47154715 qualified REIT subsidiary of a “captive real
47164716 estate investment trust ” captive real estate
47174717 investment trust,
47184718 (3) any Listed Australian Property Trust listed
47194719 Australian property trust (meaning an Australian
47204720 unit trust registered as a “Managed Investment
47214721 Scheme” “managed investment scheme” under the
47224722 Australian Corporations Act 2001 in which the
47234723 principal class of units is listed on a
47244724 recognized stock exchange in Australia and is
47254725 regularly traded on an established securities
47264726 market), or an entity organized as a trust,
47274727 provided that a Listed Australian Property Trust
47284728
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47794779 listed Australian property trust owns or
47804780 controls, directly or indirectly, seventy -five
47814781 percent (75%) or more of the voting power or
47824782 value of the beneficial interests or shares of
47834783 such trust, or
47844784 (4) any Qualified Foreign Entity qualified foreign
47854785 entity, meaning a corporation, trust, associat ion
47864786 or partnership organized outside the laws of the
47874787 United States and which satisfies the following
47884788 criteria:
47894789 (a) at least seventy-five percent (75%) of the
47904790 entity’s total asset value at the close of
47914791 its taxable year is represented by real
47924792 estate assets, as defined in Section
47934793 856(c)(5)(B) of the Internal Revenue Code of
47944794 1986, as amended, thereby including shares
47954795 or certificates of beneficial interest in
47964796 any real estate investment trust, cash and
47974797 cash equivalents, and U.S. Government
47984798 securities,
47994799 (b) the entity receives a dividend -paid
48004800 deduction comparable to Section 561 of the
48014801 Internal Revenue Code of 1986, as amended,
48024802 or is exempt from entity level tax,
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48544854 (c) the entity is required to distribute at
48554855 least eighty-five percent (85%) of its
48564856 taxable income, as computed in the
48574857 jurisdiction in which it is organized, to
48584858 the holders of its shares or certificates of
48594859 beneficial interest on an annual basis,
48604860 (d) not more than ten percent (10%) of the
48614861 voting power or value in such entity is held
48624862 directly or indirectly or co nstructively by
48634863 a single entity or individual, or the shares
48644864 or beneficial interests of such entity are
48654865 regularly traded on an established
48664866 securities market, and
48674867 (e) the entity is organized in a country which
48684868 has a tax treaty with the United States.
48694869 3. For purposes of this subsection, the constructive ownership
48704870 rules of Section 318(a) of the Internal Revenue Code, as modified by
48714871 Section 856(d)(5) of the Internal Revenue Code of 1986, as amended,
48724872 shall apply in determining the ownership of stock, assets, or net
48734873 profits of any person.
48744874 4. A real estate investment trust that does not become
48754875 regularly traded on an established securities market within one (1)
48764876 year of the date on which it first becomes a real estate investment
48774877 trust shall be deemed not to have been regularly traded on an
48784878
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49294929 established securities market, retroactive to the date it first
49304930 became a real estate investment trust, and shall file an amended
49314931 return reflecting such retroactive designation for any tax year or
49324932 part year occurring during its ini tial year of status as a real
49334933 estate investment trust. For purposes of this subsection, a real
49344934 estate investment trust becomes a real estate investment trust on
49354935 the first day it has both met the requirements of Section 856 of the
49364936 Internal Revenue Code of 1986, as amended, and has elected to be
49374937 treated as a real estate investment trust pursuant to Section
49384938 856(c)(1) of the Internal Revenue Code of 1986, as amended.
49394939 SECTION 2. This act shall become effective November 1, 2025.
49404940
49414941 60-1-1557 QD 12/31/2024 12:03:44 AM