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1 STATE OF OKLAHOMA
2 1st Session of the 60th Legislature (2025)
3 HOUSE BILL 1248 By: Strom
4
5
6 AS INTRODUCED
7 An Act relating to revenue and taxation; enacting the
Senior Service Corps Act of 2025; amending 68 O.S.
8 2021, Section 2358, as last amended by Section 155,
Chapter 452, O.S.L. 2024 (68 O.S. Supp. 2024, Section
9 2358), which relates to Oklahoma taxable income and
adjusted gross income; providing income tax exemption
10 for wages paid to certain persons performing support
services for public schools; defining term; providing
11 for noncodification; and providing an effective date.
12
13
14 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
15 SECTION 1. NEW LAW A new section of law not to be
16 codified in the Oklahoma Statutes reads as follows:
17 This act shall be known and may be cited as the "Senior Service
18 Corps Act of 2025".
19 SECTION 2. AMENDATORY 68 O.S. 2021, Section 2358, as
20 last amended by Section 155, Chapter 452, O.S.L. 2024 (68 O.S. Supp.
21 2024, Section 2358), is amended to read as follows:
22 Section 2358. For all tax years beginning after December 31,
23 1981, taxable income and adjusted gross income shall be adjusted to
24
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1 arrive at Oklahoma taxable income and Oklahoma adjusted gross income
2 as required by this section.
3 A. The taxable income of any taxpayer shall be adjusted to
4 arrive at Oklahoma taxable income for corporations and Oklahoma
5 adjusted gross income for individuals, as follows:
6 1. There shall be added interest income on obligations of any
7 state or political subdivision thereto which is not otherwise
8 exempted pursuant to other laws of this state, to the extent that
9 such interest is not included in taxable income and adjusted gross
10 income.
11 2. There shall be deducted amounts included in such income that
12 the state is prohibited from taxing because of the provisions of the
13 Federal Constitution, the State Constitution, federal laws or laws
14 of Oklahoma.
15 3. The amount of any federal net operating loss deduction shall
16 be adjusted as follows:
17 a. For carryovers and carrybacks to taxable years
18 beginning before January 1, 1981, the amount of any
19 net operating loss deduction allowed to a taxpayer for
20 federal income tax purposes shall be reduced to an
21 amount which is the same portion thereof as the loss
22 from sources within this state, as determined pursuant
23 to this section and Section 2362 of this title, for
24
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1 the taxable year in which such loss is sustained is of
2 the total loss for such year;
3 b. For carryovers and carrybacks to taxable years
4 beginning after December 31, 1980, the amount of any
5 net operating loss deduction allowed for the taxable
6 year shall be an amount equal to the aggregate of the
7 Oklahoma net operating loss carryovers and carrybacks
8 to such year. Oklahoma net operating losses shall be
9 separately determined by reference to Section 172 of
10 the Internal Revenue Code, 26 U.S.C., Section 172, as
11 modified by the Oklahoma Income Tax Act, Section 2351
12 et seq. of this title, and shall be allowed without
13 regard to the existence of a federal net operating
14 loss. For tax years beginning after December 31,
15 2000, and ending before January 1, 2008, the years to
16 which such losses may be carried shall be determined
17 solely by reference to Section 172 of the Internal
18 Revenue Code, 26 U.S.C., Section 172, with the
19 exception that the terms "net operating loss" and
20 "taxable income" shall be replaced with "Oklahoma net
21 operating loss" and "Oklahoma taxable income". For
22 tax years beginning after December 31, 2007, and
23 ending before January 1, 2009, years to which such
24 losses may be carried back shall be limited to two (2)
Req. No. 11253 Page 3
1 years. For tax years beginning after December 31,
2 2008, the years to which such losses may be carried
3 back shall be determined solely by reference to
4 Section 172 of the Internal Revenue Code, 26 U.S.C.,
5 Section 172, with the exception that the terms "net
6 operating loss" and "taxable income" shall be replaced
7 with "Oklahoma net operating loss" and "Oklahoma
8 taxable income".
9 4. Items of the following nature shall be allocated as
10 indicated. Allowable deductions attributable to items separately
11 allocable in subparagraphs a, b and c of this paragraph, whether or
12 not such items of income were actually received, shall be allocated
13 on the same basis as those items:
14 a. Income from real and tangible personal property, such
15 as rents, oil and mining production or royalties, and
16 gains or losses from sales of such property, shall be
17 allocated in accordance with the situs of such
18 property;
19 b. Income from intangible personal property, such as
20 interest, dividends, patent or copyright royalties,
21 and gains or losses from sales of such property, shall
22 be allocated in accordance with the domiciliary situs
23 of the taxpayer, except that:
24
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1 (1) where such property has acquired a nonunitary
2 business or commercial situs apart from the
3 domicile of the taxpayer such income shall be
4 allocated in accordance with such business or
5 commercial situs; interest income from
6 investments held to generate working capital for
7 a unitary business enterprise shall be included
8 in apportionable income; a resident trust or
9 resident estate shall be treated as having a
10 separate commercial or business situs insofar as
11 undistributed income is concerned, but shall not
12 be treated as having a separate commercial or
13 business situs insofar as distributed income is
14 concerned,
15 (2) for taxable years beginning after December 31,
16 2003, capital or ordinary gains or losses from
17 the sale of an ownership interest in a publicly
18 traded partnership, as defined by Section 7704(b)
19 of the Internal Revenue Code, shall be allocated
20 to this state in the ratio of the original cost
21 of such partnership's tangible property in this
22 state to the original cost of such partnership's
23 tangible property everywhere, as determined at
24 the time of the sale; if more than fifty percent
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1 (50%) of the value of the partnership's assets
2 consists of intangible assets, capital or
3 ordinary gains or losses from the sale of an
4 ownership interest in the partnership shall be
5 allocated to this state in accordance with the
6 sales factor of the partnership for its first
7 full tax period immediately preceding its tax
8 period during which the ownership interest in the
9 partnership was sold; the provisions of this
10 division shall only apply if the capital or
11 ordinary gains or losses from the sale of an
12 ownership interest in a partnership do not
13 constitute qualifying gain receiving capital
14 treatment as defined in subparagraph a of
15 paragraph 2 of subsection F of this section,
16 (3) income from such property which is required to be
17 allocated pursuant to the provisions of paragraph
18 5 of this subsection shall be allocated as herein
19 provided;
20 c. Net income or loss from a business activity which is
21 not a part of business carried on within or without
22 the state of a unitary character shall be separately
23 allocated to the state in which such activity is
24 conducted;
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1 d. In the case of a manufacturing or processing
2 enterprise the business of which in Oklahoma consists
3 solely of marketing its products by:
4 (1) sales having a situs without this state, shipped
5 directly to a point from without the state to a
6 purchaser within the state, commonly known as
7 interstate sales,
8 (2) sales of the product stored in public warehouses
9 within the state pursuant to "in transit"
10 tariffs, as prescribed and allowed by the
11 Interstate Commerce Commission, to a purchaser
12 within the state,
13 (3) sales of the product stored in public warehouses
14 within the state where the shipment to such
15 warehouses is not covered by "in transit"
16 tariffs, as prescribed and allowed by the
17 Interstate Commerce Commission, to a purchaser
18 within or without the state,
19 the Oklahoma net income shall, at the option of the
20 taxpayer, be that portion of the total net income of
21 the taxpayer for federal income tax purposes derived
22 from the manufacture and/or processing and sales
23 everywhere as determined by the ratio of the sales
24 defined in this section made to the purchaser within
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1 the state to the total sales everywhere. The term
2 "public warehouse" as used in this subparagraph means
3 a licensed public warehouse, the principal business of
4 which is warehousing merchandise for the public;
5 e. In the case of insurance companies, Oklahoma taxable
6 income shall be taxable income of the taxpayer for
7 federal tax purposes, as adjusted for the adjustments
8 provided pursuant to the provisions of paragraphs 1
9 and 2 of this subsection, apportioned as follows:
10 (1) except as otherwise provided by division (2) of
11 this subparagraph, taxable income of an insurance
12 company for a taxable year shall be apportioned
13 to this state by multiplying such income by a
14 fraction, the numerator of which is the direct
15 premiums written for insurance on property or
16 risks in this state, and the denominator of which
17 is the direct premiums written for insurance on
18 property or risks everywhere. For purposes of
19 this subsection, the term "direct premiums
20 written" means the total amount of direct
21 premiums written, assessments and annuity
22 considerations as reported for the taxable year
23 on the annual statement filed by the company with
24 the Insurance Commissioner in the form approved
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1 by the National Association of Insurance
2 Commissioners, or such other form as may be
3 prescribed in lieu thereof,
4 (2) if the principal source of premiums written by an
5 insurance company consists of premiums for
6 reinsurance accepted by it, the taxable income of
7 such company shall be apportioned to this state
8 by multiplying such income by a fraction, the
9 numerator of which is the sum of (a) direct
10 premiums written for insurance on property or
11 risks in this state, plus (b) premiums written
12 for reinsurance accepted in respect of property
13 or risks in this state, and the denominator of
14 which is the sum of (c) direct premiums written
15 for insurance on property or risks everywhere,
16 plus (d) premiums written for reinsurance
17 accepted in respect of property or risks
18 everywhere. For purposes of this paragraph,
19 premiums written for reinsurance accepted in
20 respect of property or risks in this state,
21 whether or not otherwise determinable, may at the
22 election of the company be determined on the
23 basis of the proportion which premiums written
24 for insurance accepted from companies
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1 commercially domiciled in Oklahoma bears to
2 premiums written for reinsurance accepted from
3 all sources, or alternatively in the proportion
4 which the sum of the direct premiums written for
5 insurance on property or risks in this state by
6 each ceding company from which reinsurance is
7 accepted bears to the sum of the total direct
8 premiums written by each such ceding company for
9 the taxable year.
10 5. The net income or loss remaining after the separate
11 allocation in paragraph 4 of this subsection, being that which is
12 derived from a unitary business enterprise, shall be apportioned to
13 this state on the basis of the arithmetical average of three factors
14 consisting of property, payroll and sales or gross revenue
15 enumerated as subparagraphs a, b and c of this paragraph. Net
16 income or loss as used in this paragraph includes that derived from
17 patent or copyright royalties, purchase discounts, and interest on
18 accounts receivable relating to or arising from a business activity,
19 the income from which is apportioned pursuant to this subsection,
20 including the sale or other disposition of such property and any
21 other property used in the unitary enterprise. Deductions used in
22 computing such net income or loss shall not include taxes based on
23 or measured by income. Provided, for corporations whose property
24 for purposes of the tax imposed by Section 2355 of this title has an
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1 initial investment cost equaling or exceeding Two Hundred Million
2 Dollars ($200,000,000.00) and such investment is made on or after
3 July 1, 1997, or for corporations which expand their property or
4 facilities in this state and such expansion has an investment cost
5 equaling or exceeding Two Hundred Million Dollars ($200,000,000.00)
6 over a period not to exceed three (3) years, and such expansion is
7 commenced on or after January 1, 2000, the three factors shall be
8 apportioned with property and payroll, each comprising twenty-five
9 percent (25%) of the apportionment factor and sales comprising fifty
10 percent (50%) of the apportionment factor. The apportionment
11 factors shall be computed as follows:
12 a. The property factor is a fraction, the numerator of
13 which is the average value of the taxpayer's real and
14 tangible personal property owned or rented and used in
15 this state during the tax period and the denominator
16 of which is the average value of all the taxpayer's
17 real and tangible personal property everywhere owned
18 or rented and used during the tax period.
19 (1) Property, the income from which is separately
20 allocated in paragraph 4 of this subsection,
21 shall not be included in determining this
22 fraction. The numerator of the fraction shall
23 include a portion of the investment in
24 transportation and other equipment having no
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1 fixed situs, such as rolling stock, buses, trucks
2 and trailers, including machinery and equipment
3 carried thereon, airplanes, salespersons'
4 automobiles and other similar equipment, in the
5 proportion that miles traveled in Oklahoma by
6 such equipment bears to total miles traveled,
7 (2) Property owned by the taxpayer is valued at its
8 original cost. Property rented by the taxpayer
9 is valued at eight times the net annual rental
10 rate. Net annual rental rate is the annual
11 rental rate paid by the taxpayer, less any annual
12 rental rate received by the taxpayer from
13 subrentals,
14 (3) The average value of property shall be determined
15 by averaging the values at the beginning and
16 ending of the tax period but the Oklahoma Tax
17 Commission may require the averaging of monthly
18 values during the tax period if reasonably
19 required to reflect properly the average value of
20 the taxpayer's property;
21 b. The payroll factor is a fraction, the numerator of
22 which is the total compensation for services rendered
23 in the state during the tax period, and the
24 denominator of which is the total compensation for
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1 services rendered everywhere during the tax period.
2 "Compensation", as used in this subsection means those
3 paid-for services to the extent related to the unitary
4 business but does not include officers' salaries,
5 wages and other compensation.
6 (1) In the case of a transportation enterprise, the
7 numerator of the fraction shall include a portion
8 of such expenditure in connection with employees
9 operating equipment over a fixed route, such as
10 railroad employees, airline pilots, or bus
11 drivers, in this state only a part of the time,
12 in the proportion that mileage traveled in
13 Oklahoma bears to total mileage traveled by such
14 employees,
15 (2) In any case the numerator of the fraction shall
16 include a portion of such expenditures in
17 connection with itinerant employees, such as
18 traveling salespersons, in this state only a part
19 of the time, in the proportion that time spent in
20 Oklahoma bears to total time spent in furtherance
21 of the enterprise by such employees;
22 c. The sales factor is a fraction, the numerator of which
23 is the total sales or gross revenue of the taxpayer in
24 this state during the tax period, and the denominator
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1 of which is the total sales or gross revenue of the
2 taxpayer everywhere during the tax period. "Sales",
3 as used in this subsection does not include sales or
4 gross revenue which are separately allocated in
5 paragraph 4 of this subsection.
6 (1) Sales of tangible personal property have a situs
7 in this state if the property is delivered or
8 shipped to a purchaser other than the United
9 States government, within this state regardless
10 of the FOB point or other conditions of the sale;
11 or the property is shipped from an office, store,
12 warehouse, factory or other place of storage in
13 this state and (a) the purchaser is the United
14 States government or (b) the taxpayer is not
15 doing business in the state of the destination of
16 the shipment.
17 (2) In the case of a railroad or interurban railway
18 enterprise, the numerator of the fraction shall
19 not be less than the allocation of revenues to
20 this state as shown in its annual report to the
21 Corporation Commission.
22 (3) In the case of an airline, truck or bus
23 enterprise or freight car, tank car, refrigerator
24 car or other railroad equipment enterprise, the
Req. No. 11253 Page 14
1 numerator of the fraction shall include a portion
2 of revenue from interstate transportation in the
3 proportion that interstate mileage traveled in
4 Oklahoma bears to total interstate mileage
5 traveled.
6 (4) In the case of an oil, gasoline or gas pipeline
7 enterprise, the numerator of the fraction shall
8 be either the total of traffic units of the
9 enterprise within Oklahoma or the revenue
10 allocated to Oklahoma based upon miles moved, at
11 the option of the taxpayer, and the denominator
12 of which shall be the total of traffic units of
13 the enterprise or the revenue of the enterprise
14 everywhere as appropriate to the numerator. A
15 "traffic unit" is hereby defined as the
16 transportation for a distance of one (1) mile of
17 one (1) barrel of oil, one (1) gallon of gasoline
18 or one thousand (1,000) cubic feet of natural or
19 casinghead gas, as the case may be.
20 (5) In the case of a telephone or telegraph or other
21 communication enterprise, the numerator of the
22 fraction shall include that portion of the
23 interstate revenue as is allocated pursuant to
24 the accounting procedures prescribed by the
Req. No. 11253 Page 15
1 Federal Communications Commission; provided that
2 in respect to each corporation or business entity
3 required by the Federal Communications Commission
4 to keep its books and records in accordance with
5 a uniform system of accounts prescribed by such
6 Commission, the intrastate net income shall be
7 determined separately in the manner provided by
8 such uniform system of accounts and only the
9 interstate income shall be subject to allocation
10 pursuant to the provisions of this subsection.
11 Provided further, that the gross revenue factors
12 shall be those as are determined pursuant to the
13 accounting procedures prescribed by the Federal
14 Communications Commission.
15 In any case where the apportionment of the three factors
16 prescribed in this paragraph attributes to Oklahoma a portion of net
17 income of the enterprise out of all appropriate proportion to the
18 property owned and/or business transacted within this state, because
19 of the fact that one or more of the factors so prescribed are not
20 employed to any appreciable extent in furtherance of the enterprise;
21 or because one or more factors not so prescribed are employed to a
22 considerable extent in furtherance of the enterprise; or because of
23 other reasons, the Tax Commission is empowered to permit, after a
24 showing by taxpayer that an excessive portion of net income has been
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1 attributed to Oklahoma, or require, when in its judgment an
2 insufficient portion of net income has been attributed to Oklahoma,
3 the elimination, substitution, or use of additional factors, or
4 reduction or increase in the weight of such prescribed factors.
5 Provided, however, that any such variance from such prescribed
6 factors which has the effect of increasing the portion of net income
7 attributable to Oklahoma must not be inherently arbitrary, and
8 application of the recomputed final apportionment to the net income
9 of the enterprise must attribute to Oklahoma only a reasonable
10 portion thereof.
11 6. For calendar years 1997 and 1998, the owner of a new or
12 expanded agricultural commodity processing facility in this state
13 may exclude from Oklahoma taxable income, or in the case of an
14 individual, the Oklahoma adjusted gross income, fifteen percent
15 (15%) of the investment by the owner in the new or expanded
16 agricultural commodity processing facility. For calendar year 1999,
17 and all subsequent years, the percentage, not to exceed fifteen
18 percent (15%), available to the owner of a new or expanded
19 agricultural commodity processing facility in this state claiming
20 the exemption shall be adjusted annually so that the total estimated
21 reduction in tax liability does not exceed One Million Dollars
22 ($1,000,000.00) annually. The Tax Commission shall promulgate rules
23 for determining the percentage of the investment which each eligible
24 taxpayer may exclude. The exclusion provided by this paragraph
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1 shall be taken in the taxable year when the investment is made. In
2 the event the total reduction in tax liability authorized by this
3 paragraph exceeds One Million Dollars ($1,000,000.00) in any
4 calendar year, the Tax Commission shall permit any excess over One
5 Million Dollars ($1,000,000.00) and shall factor such excess into
6 the percentage for subsequent years. Any amount of the exemption
7 permitted to be excluded pursuant to the provisions of this
8 paragraph but not used in any year may be carried forward as an
9 exemption from income pursuant to the provisions of this paragraph
10 for a period not exceeding six (6) years following the year in which
11 the investment was originally made.
12 For purposes of this paragraph:
13 a. "Agricultural commodity processing facility" means
14 building, structures, fixtures and improvements used
15 or operated primarily for the processing or production
16 of marketable products from agricultural commodities.
17 The term shall also mean a dairy operation that
18 requires a depreciable investment of at least Two
19 Hundred Fifty Thousand Dollars ($250,000.00) and which
20 produces milk from dairy cows. The term does not
21 include a facility that provides only, and nothing
22 more than, storage, cleaning, drying or transportation
23 of agricultural commodities, and
24
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1 b. "Facility" means each part of the facility which is
2 used in a process primarily for:
3 (1) the processing of agricultural commodities,
4 including receiving or storing agricultural
5 commodities, or the production of milk at a dairy
6 operation,
7 (2) transporting the agricultural commodities or
8 product before, during or after the processing,
9 or
10 (3) packaging or otherwise preparing the product for
11 sale or shipment.
12 7. Despite any provision to the contrary in paragraph 3 of this
13 subsection, for taxable years beginning after December 31, 1999, in
14 the case of a taxpayer which has a farming loss, such farming loss
15 shall be considered a net operating loss carryback in accordance
16 with and to the extent of the Internal Revenue Code, 26 U.S.C.,
17 Section 172(b)(G). However, the amount of the net operating loss
18 carryback shall not exceed the lesser of:
19 a. Sixty Thousand Dollars ($60,000.00), or
20 b. the loss properly shown on Schedule F of the Internal
21 Revenue Service Form 1040 reduced by one-half (1/2) of
22 the income from all other sources other than reflected
23 on Schedule F.
24
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1 8. In taxable years beginning after December 31, 1995, all
2 qualified wages equal to the federal income tax credit set forth in
3 26 U.S.C.A., Section 45A, shall be deducted from taxable income.
4 The deduction allowed pursuant to this paragraph shall only be
5 permitted for the tax years in which the federal tax credit pursuant
6 to 26 U.S.C.A., Section 45A, is allowed. For purposes of this
7 paragraph, "qualified wages" means those wages used to calculate the
8 federal credit pursuant to 26 U.S.C.A., Section 45A.
9 9. In taxable years beginning after December 31, 2005, an
10 employer that is eligible for and utilizes the Safety Pays OSHA
11 Consultation Service provided by the Oklahoma Department of Labor
12 shall receive an exemption from taxable income in the amount of One
13 Thousand Dollars ($1,000.00) for the tax year that the service is
14 utilized.
15 10. For taxable years beginning on or after January 1, 2010,
16 there shall be added to Oklahoma taxable income an amount equal to
17 the amount of deferred income not included in such taxable income
18 pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986
19 as amended by Section 1231 of the American Recovery and Reinvestment
20 Act of 2009 (P.L. No. 111-5). There shall be subtracted from
21 Oklahoma taxable income an amount equal to the amount of deferred
22 income included in such taxable income pursuant to Section 108(i)(1)
23 of the Internal Revenue Code by Section 1231 of the American
24 Recovery and Reinvestment Act of 2009 (P.L. No. 111-5).
Req. No. 11253 Page 20
1 11. For taxable years beginning on or after January 1, 2019,
2 there shall be subtracted from Oklahoma taxable income or adjusted
3 gross income any item of income or gain, and there shall be added to
4 Oklahoma taxable income or adjusted gross income any item of loss or
5 deduction that in the absence of an election pursuant to the
6 provisions of the Pass-Through Entity Tax Equity Act of 2019 would
7 be allocated to a member or to an indirect member of an electing
8 pass-through entity pursuant to Section 2351 et seq. of this title,
9 if (i) the electing pass-through entity has accounted for such item
10 in computing its Oklahoma net entity income or loss pursuant to the
11 provisions of the Pass-Through Entity Tax Equity Act of 2019, and
12 (ii) the total amount of tax attributable to any resulting Oklahoma
13 net entity income has been paid. The Oklahoma Tax Commission shall
14 promulgate rules for the reporting of such exclusion to direct and
15 indirect members of the electing pass-through entity. As used in
16 this paragraph, "electing pass-through entity", "indirect member",
17 and "member" shall be defined in the same manner as prescribed by
18 Section 2355.1P-2 of this title. Notwithstanding the application of
19 this paragraph, the adjusted tax basis of any ownership interest in
20 a pass-through entity for purposes of Section 2351 et seq. of this
21 title shall be equal to its adjusted tax basis for federal income
22 tax purposes.
23 12. For taxable years beginning on or after January 1, 2026,
24 there shall be exempt from Oklahoma adjusted gross income any wages
Req. No. 11253 Page 21
1 received by a person who, as of the date the first support service
2 described by this paragraph is performed, is fifty-nine (59) years
3 of age or older, who is in receipt of or eligible to receive
4 distributions from any form of employer sponsored retirement plan, a
5 pension plan, a defined contribution plan, Social Security benefits
6 or any combination of such sources of benefits, who is not
7 performing full-time employment for any other person or entity, and
8 who is hired on a part-time basis by a public school of this state
9 to perform services, other than teaching or other service which
10 requires a certificate pursuant to law, to support education and
11 related functions of the school. As used in this paragraph,
12 "support service" means assistance during customary arrival or
13 departure times for the students each school day and associated with
14 such arrivals or departures or both, assistance during any meal
15 period at the school, assistance during a recess whether indoors or
16 outdoors, assistance with extracurricular activities such as
17 athletic events, academic competitions and similar functions, any
18 form of lawful and authorized assistance as requested by the persons
19 with supervisory responsibilities over employees at the school, and
20 assistance provided to certified or noncertified personnel employed
21 by the school or school district in the performance of duties or
22 authorized functions of such personnel.
23 B. 1. The taxable income of any corporation shall be further
24 adjusted to arrive at Oklahoma taxable income, except those
Req. No. 11253 Page 22
1 corporations electing treatment as provided in subchapter S of the
2 Internal Revenue Code, 26 U.S.C., Section 1361 et seq., and Section
3 2365 of this title, deductions pursuant to the provisions of the
4 Accelerated Cost Recovery System as defined and allowed in the
5 Economic Recovery Tax Act of 1981, Public Law 97-34, 26 U.S.C.,
6 Section 168, for depreciation of assets placed into service after
7 December 31, 1981, shall not be allowed in calculating Oklahoma
8 taxable income. Such corporations shall be allowed a deduction for
9 depreciation of assets placed into service after December 31, 1981,
10 in accordance with provisions of the Internal Revenue Code, 26
11 U.S.C., Section 1 et seq., in effect immediately prior to the
12 enactment of the Accelerated Cost Recovery System. The Oklahoma tax
13 basis for all such assets placed into service after December 31,
14 1981, calculated in this section shall be retained and utilized for
15 all Oklahoma income tax purposes through the final disposition of
16 such assets.
17 Notwithstanding any other provisions of the Oklahoma Income Tax
18 Act, Section 2351 et seq. of this title, or of the Internal Revenue
19 Code to the contrary, this subsection shall control calculation of
20 depreciation of assets placed into service after December 31, 1981,
21 and before January 1, 1983.
22 For assets placed in service and held by a corporation in which
23 accelerated cost recovery system was previously disallowed, an
24 adjustment to taxable income is required in the first taxable year
Req. No. 11253 Page 23
1 beginning after December 31, 1982, to reconcile the basis of such
2 assets to the basis allowed in the Internal Revenue Code. The
3 purpose of this adjustment is to equalize the basis and allowance
4 for depreciation accounts between that reported to the Internal
5 Revenue Service and that reported to Oklahoma.
6 2. For tax years beginning on or after January 1, 2009, and
7 ending on or before December 31, 2009, there shall be added to
8 Oklahoma taxable income any amount in excess of One Hundred Seventy-
9 five Thousand Dollars ($175,000.00) which has been deducted as a
10 small business expense under Internal Revenue Code, Section 179 as
11 provided in the American Recovery and Reinvestment Act of 2009.
12 C. 1. For taxable years beginning after December 31, 1987, the
13 taxable income of any corporation shall be further adjusted to
14 arrive at Oklahoma taxable income for transfers of technology to
15 qualified small businesses located in Oklahoma. Such transferor
16 corporation shall be allowed an exemption from taxable income of an
17 amount equal to the amount of royalty payment received as a result
18 of such transfer; provided, however, such amount shall not exceed
19 ten percent (10%) of the amount of gross proceeds received by such
20 transferor corporation as a result of the technology transfer. Such
21 exemption shall be allowed for a period not to exceed ten (10) years
22 from the date of receipt of the first royalty payment accruing from
23 such transfer. No exemption may be claimed for transfers of
24
Req. No. 11253 Page 24
1 technology to qualified small businesses made prior to January 1,
2 1988.
3 2. For purposes of this subsection:
4 a. "Qualified small business" means an entity, whether
5 organized as a corporation, partnership, or
6 proprietorship, organized for profit with its
7 principal place of business located within this state
8 and which meets the following criteria:
9 (1) Capitalization of not more than Two Hundred Fifty
10 Thousand Dollars ($250,000.00),
11 (2) Having at least fifty percent (50%) of its
12 employees and assets located in Oklahoma at the
13 time of the transfer, and
14 (3) Not a subsidiary or affiliate of the transferor
15 corporation;
16 b. "Technology" means a proprietary process, formula,
17 pattern, device or compilation of scientific or
18 technical information which is not in the public
19 domain;
20 c. "Transferor corporation" means a corporation which is
21 the exclusive and undisputed owner of the technology
22 at the time the transfer is made; and
23
24
Req. No. 11253 Page 25
1 d. "Gross proceeds" means the total amount of
2 consideration for the transfer of technology, whether
3 the consideration is in money or otherwise.
4 D. 1. For taxable years beginning after December 31, 2005, the
5 taxable income of any corporation, estate or trust, shall be further
6 adjusted for qualifying gains receiving capital treatment. Such
7 corporations, estates or trusts shall be allowed a deduction from
8 Oklahoma taxable income for the amount of qualifying gains receiving
9 capital treatment earned by the corporation, estate or trust during
10 the taxable year and included in the federal taxable income of such
11 corporation, estate or trust.
12 2. As used in this subsection:
13 a. "qualifying gains receiving capital treatment" means
14 the amount of net capital gains, as defined in Section
15 1222(11) of the Internal Revenue Code, included in the
16 federal income tax return of the corporation, estate
17 or trust that result from:
18 (1) the sale of real property or tangible personal
19 property located within Oklahoma that has been
20 directly or indirectly owned by the corporation,
21 estate or trust for a holding period of at least
22 five (5) years prior to the date of the
23 transaction from which such net capital gains
24 arise,
Req. No. 11253 Page 26
1 (2) the sale of stock or on the sale of an ownership
2 interest in an Oklahoma company, limited
3 liability company, or partnership where such
4 stock or ownership interest has been directly or
5 indirectly owned by the corporation, estate or
6 trust for a holding period of at least three (3)
7 years prior to the date of the transaction from
8 which the net capital gains arise, or
9 (3) the sale of real property, tangible personal
10 property or intangible personal property located
11 within Oklahoma as part of the sale of all or
12 substantially all of the assets of an Oklahoma
13 company, limited liability company, or
14 partnership where such property has been directly
15 or indirectly owned by such entity owned by the
16 owners of such entity, and used in or derived
17 from such entity for a period of at least three
18 (3) years prior to the date of the transaction
19 from which the net capital gains arise,
20 b. "holding period" means an uninterrupted period of
21 time. The holding period shall include any additional
22 period when the property was held by another
23 individual or entity, if such additional period is
24
Req. No. 11253 Page 27
1 included in the taxpayer's holding period for the
2 asset pursuant to the Internal Revenue Code,
3 c. "Oklahoma company", "limited liability company", or
4 "partnership" means an entity whose primary
5 headquarters have been located in Oklahoma for at
6 least three (3) uninterrupted years prior to the date
7 of the transaction from which the net capital gains
8 arise,
9 d. "direct" means the taxpayer directly owns the asset,
10 and
11 e. "indirect" means the taxpayer owns an interest in a
12 pass-through entity (or chain of pass-through
13 entities) that sells the asset that gives rise to the
14 qualifying gains receiving capital treatment.
15 (1) With respect to sales of real property or
16 tangible personal property located within
17 Oklahoma, the deduction described in this
18 subsection shall not apply unless the pass-
19 through entity that makes the sale has held the
20 property for not less than five (5) uninterrupted
21 years prior to the date of the transaction that
22 created the capital gain, and each pass-through
23 entity included in the chain of ownership has
24 been a member, partner, or shareholder of the
Req. No. 11253 Page 28
1 pass-through entity in the tier immediately below
2 it for an uninterrupted period of not less than
3 five (5) years.
4 (2) With respect to sales of stock or ownership
5 interest in or sales of all or substantially all
6 of the assets of an Oklahoma company, limited
7 liability company, or partnership, the deduction
8 described in this subsection shall not apply
9 unless the pass-through entity that makes the
10 sale has held the stock or ownership interest or
11 the assets for not less than three (3)
12 uninterrupted years prior to the date of the
13 transaction that created the capital gain, and
14 each pass-through entity included in the chain of
15 ownership has been a member, partner or
16 shareholder of the pass-through entity in the
17 tier immediately below it for an uninterrupted
18 period of not less than three (3) years.
19 E. The Oklahoma adjusted gross income of any individual
20 taxpayer shall be further adjusted as follows to arrive at Oklahoma
21 taxable income:
22 1. a. In the case of individuals, there shall be added or
23 deducted, as the case may be, the difference necessary
24 to allow personal exemptions of One Thousand Dollars
Req. No. 11253 Page 29
1 ($1,000.00) in lieu of the personal exemptions allowed
2 by the Internal Revenue Code.
3 b. There shall be allowed an additional exemption of One
4 Thousand Dollars ($1,000.00) for each taxpayer or
5 spouse who is blind at the close of the tax year. For
6 purposes of this subparagraph, an individual is blind
7 only if the central visual acuity of the individual
8 does not exceed 20/200 in the better eye with
9 correcting lenses, or if the visual acuity of the
10 individual is greater than 20/200, but is accompanied
11 by a limitation in the fields of vision such that the
12 widest diameter of the visual field subtends an angle
13 no greater than twenty (20) degrees.
14 c. There shall be allowed an additional exemption of One
15 Thousand Dollars ($1,000.00) for each taxpayer or
16 spouse who is sixty-five (65) years of age or older at
17 the close of the tax year based upon the filing status
18 and federal adjusted gross income of the taxpayer.
19 Taxpayers with the following filing status may claim
20 this exemption if the federal adjusted gross income
21 does not exceed:
22 (1) Twenty-five Thousand Dollars ($25,000.00) if
23 married and filing jointly,
24
Req. No. 11253 Page 30
1 (2) Twelve Thousand Five Hundred Dollars ($12,500.00)
2 if married and filing separately,
3 (3) Fifteen Thousand Dollars ($15,000.00) if single,
4 and
5 (4) Nineteen Thousand Dollars ($19,000.00) if a
6 qualifying head of household.
7 Provided, for taxable years beginning after December
8 31, 1999, amounts included in the calculation of
9 federal adjusted gross income pursuant to the
10 conversion of a traditional individual retirement
11 account to a Roth individual retirement account shall
12 be excluded from federal adjusted gross income for
13 purposes of the income thresholds provided in this
14 subparagraph.
15 2. a. For taxable years beginning on or before December 31,
16 2005, in the case of individuals who use the standard
17 deduction in determining taxable income, there shall
18 be added or deducted, as the case may be, the
19 difference necessary to allow a standard deduction in
20 lieu of the standard deduction allowed by the Internal
21 Revenue Code, in an amount equal to the larger of
22 fifteen percent (15%) of the Oklahoma adjusted gross
23 income or One Thousand Dollars ($1,000.00), but not to
24 exceed Two Thousand Dollars ($2,000.00), except that
Req. No. 11253 Page 31
1 in the case of a married individual filing a separate
2 return such deduction shall be the larger of fifteen
3 percent (15%) of such Oklahoma adjusted gross income
4 or Five Hundred Dollars ($500.00), but not to exceed
5 the maximum amount of One Thousand Dollars
6 ($1,000.00).
7 b. For taxable years beginning on or after January 1,
8 2006, and before January 1, 2007, in the case of
9 individuals who use the standard deduction in
10 determining taxable income, there shall be added or
11 deducted, as the case may be, the difference necessary
12 to allow a standard deduction in lieu of the standard
13 deduction allowed by the Internal Revenue Code, in an
14 amount equal to:
15 (1) Three Thousand Dollars ($3,000.00), if the filing
16 status is married filing joint, head of household
17 or qualifying widow, or
18 (2) Two Thousand Dollars ($2,000.00), if the filing
19 status is single or married filing separate.
20 c. For the taxable year beginning on January 1, 2007, and
21 ending December 31, 2007, in the case of individuals
22 who use the standard deduction in determining taxable
23 income, there shall be added or deducted, as the case
24 may be, the difference necessary to allow a standard
Req. No. 11253 Page 32
1 deduction in lieu of the standard deduction allowed by
2 the Internal Revenue Code, in an amount equal to:
3 (1) Five Thousand Five Hundred Dollars ($5,500.00),
4 if the filing status is married filing joint or
5 qualifying widow, or
6 (2) Four Thousand One Hundred Twenty-five Dollars
7 ($4,125.00) for a head of household, or
8 (3) Two Thousand Seven Hundred Fifty Dollars
9 ($2,750.00), if the filing status is single or
10 married filing separate.
11 d. For the taxable year beginning on January 1, 2008, and
12 ending December 31, 2008, in the case of individuals
13 who use the standard deduction in determining taxable
14 income, there shall be added or deducted, as the case
15 may be, the difference necessary to allow a standard
16 deduction in lieu of the standard deduction allowed by
17 the Internal Revenue Code, in an amount equal to:
18 (1) Six Thousand Five Hundred Dollars ($6,500.00), if
19 the filing status is married filing joint or
20 qualifying widow,
21 (2) Four Thousand Eight Hundred Seventy-five Dollars
22 ($4,875.00) for a head of household, or
23
24
Req. No. 11253 Page 33
1 (3) Three Thousand Two Hundred Fifty Dollars
2 ($3,250.00), if the filing status is single or
3 married filing separate.
4 e. For the taxable year beginning on January 1, 2009, and
5 ending December 31, 2009, in the case of individuals
6 who use the standard deduction in determining taxable
7 income, there shall be added or deducted, as the case
8 may be, the difference necessary to allow a standard
9 deduction in lieu of the standard deduction allowed by
10 the Internal Revenue Code, in an amount equal to:
11 (1) Eight Thousand Five Hundred Dollars ($8,500.00),
12 if the filing status is married filing joint or
13 qualifying widow,
14 (2) Six Thousand Three Hundred Seventy-five Dollars
15 ($6,375.00) for a head of household, or
16 (3) Four Thousand Two Hundred Fifty Dollars
17 ($4,250.00), if the filing status is single or
18 married filing separate.
19 Oklahoma adjusted gross income shall be increased by
20 any amounts paid for motor vehicle excise taxes which
21 were deducted as allowed by the Internal Revenue Code.
22 f. For taxable years beginning on or after January 1,
23 2010, and ending on December 31, 2016, in the case of
24 individuals who use the standard deduction in
Req. No. 11253 Page 34
1 determining taxable income, there shall be added or
2 deducted, as the case may be, the difference necessary
3 to allow a standard deduction equal to the standard
4 deduction allowed by the Internal Revenue Code, based
5 upon the amount and filing status prescribed by such
6 Code for purposes of filing federal individual income
7 tax returns.
8 g. For taxable years beginning on or after January 1,
9 2017, in the case of individuals who use the standard
10 deduction in determining taxable income, there shall
11 be added or deducted, as the case may be, the
12 difference necessary to allow a standard deduction in
13 lieu of the standard deduction allowed by the Internal
14 Revenue Code, as follows:
15 (1) Six Thousand Three Hundred Fifty Dollars
16 ($6,350.00) for single or married filing
17 separately,
18 (2) Twelve Thousand Seven Hundred Dollars
19 ($12,700.00) for married filing jointly or
20 qualifying widower with dependent child, and
21 (3) Nine Thousand Three Hundred Fifty Dollars
22 ($9,350.00) for head of household.
23 3. a. In the case of resident and part-year resident
24 individuals having adjusted gross income from sources
Req. No. 11253 Page 35
1 both within and without the state, the itemized or
2 standard deductions and personal exemptions shall be
3 reduced to an amount which is the same portion of the
4 total thereof as Oklahoma adjusted gross income is of
5 adjusted gross income. To the extent itemized
6 deductions include allowable moving expense, proration
7 of moving expense shall not be required or permitted
8 but allowable moving expense shall be fully deductible
9 for those taxpayers moving within or into Oklahoma and
10 no part of moving expense shall be deductible for
11 those taxpayers moving without or out of Oklahoma.
12 All other itemized or standard deductions and personal
13 exemptions shall be subject to proration as provided
14 by law.
15 b. For taxable years beginning on or after January 1,
16 2018, the net amount of itemized deductions allowable
17 on an Oklahoma income tax return, subject to the
18 provisions of paragraph 24 of this subsection, shall
19 not exceed Seventeen Thousand Dollars ($17,000.00).
20 For purposes of this subparagraph, charitable
21 contributions and medical expenses deductible for
22 federal income tax purposes shall be excluded from the
23 amount of Seventeen Thousand Dollars ($17,000.00) as
24 specified by this subparagraph.
Req. No. 11253 Page 36
1 4. A resident individual with a physical disability
2 constituting a substantial handicap to employment may deduct from
3 Oklahoma adjusted gross income such expenditures to modify a motor
4 vehicle, home or workplace as are necessary to compensate for his or
5 her handicap. A veteran certified by the Department of Veterans
6 Affairs of the federal government as having a service-connected
7 disability shall be conclusively presumed to be an individual with a
8 physical disability constituting a substantial handicap to
9 employment. The Tax Commission shall promulgate rules containing a
10 list of combinations of common disabilities and modifications which
11 may be presumed to qualify for this deduction. The Tax Commission
12 shall prescribe necessary requirements for verification.
13 5. a. Before July 1, 2010, the first One Thousand Five
14 Hundred Dollars ($1,500.00) received by any person
15 from the United States as salary or compensation in
16 any form, other than retirement benefits, as a member
17 of any component of the Armed Forces of the United
18 States shall be deducted from taxable income.
19 b. On or after July 1, 2010, one hundred percent (100%)
20 of the income received by any person from the United
21 States as salary or compensation in any form, other
22 than retirement benefits, as a member of any component
23 of the Armed Forces of the United States shall be
24 deducted from taxable income.
Req. No. 11253 Page 37
1 c. Whenever the filing of a timely income tax return by a
2 member of the Armed Forces of the United States is
3 made impracticable or impossible of accomplishment by
4 reason of:
5 (1) absence from the United States, which term
6 includes only the states and the District of
7 Columbia,
8 (2) absence from the State of Oklahoma while on
9 active duty, or
10 (3) confinement in a hospital within the United
11 States for treatment of wounds, injuries or
12 disease,
13 the time for filing a return and paying an income tax
14 shall be and is hereby extended without incurring
15 liability for interest or penalties, to the fifteenth
16 day of the third month following the month in which:
17 (a) Such individual shall return to the United
18 States if the extension is granted pursuant
19 to subparagraph a of this paragraph, return
20 to the State of Oklahoma if the extension is
21 granted pursuant to subparagraph b of this
22 paragraph or be discharged from such
23 hospital if the extension is granted
24
Req. No. 11253 Page 38
1 pursuant to subparagraph c of this
2 paragraph, or
3 (b) An executor, administrator, or conservator
4 of the estate of the taxpayer is appointed,
5 whichever event occurs the earliest.
6 Provided, that the Tax Commission may, in its discretion, grant
7 any member of the Armed Forces of the United States an extension of
8 time for filing of income tax returns and payment of income tax
9 without incurring liabilities for interest or penalties. Such
10 extension may be granted only when in the judgment of the Tax
11 Commission a good cause exists therefor and may be for a period in
12 excess of six (6) months. A record of every such extension granted,
13 and the reason therefor, shall be kept.
14 6. Before July 1, 2010, the salary or any other form of
15 compensation, received from the United States by a member of any
16 component of the Armed Forces of the United States, shall be
17 deducted from taxable income during the time in which the person is
18 detained by the enemy in a conflict, is a prisoner of war or is
19 missing in action and not deceased; provided, after July 1, 2010,
20 all such salary or compensation shall be subject to the deduction as
21 provided pursuant to paragraph 5 of this subsection.
22 7. a. An individual taxpayer, whether resident or
23 nonresident, may deduct an amount equal to the federal
24
Req. No. 11253 Page 39
1 income taxes paid by the taxpayer during the taxable
2 year.
3 b. Federal taxes as described in subparagraph a of this
4 paragraph shall be deductible by any individual
5 taxpayer, whether resident or nonresident, only to the
6 extent they relate to income subject to taxation
7 pursuant to the provisions of the Oklahoma Income Tax
8 Act. The maximum amount allowable in the preceding
9 paragraph shall be prorated on the ratio of the
10 Oklahoma adjusted gross income to federal adjusted
11 gross income.
12 c. For the purpose of this paragraph, "federal income
13 taxes paid" shall mean federal income taxes, surtaxes
14 imposed on incomes or excess profits taxes, as though
15 the taxpayer was on the accrual basis. In determining
16 the amount of deduction for federal income taxes for
17 tax year 2001, the amount of the deduction shall not
18 be adjusted by the amount of any accelerated ten
19 percent (10%) tax rate bracket credit or advanced
20 refund of the credit received during the tax year
21 provided pursuant to the federal Economic Growth and
22 Tax Relief Reconciliation Act of 2001, P.L. No. 107-
23 16, and the advanced refund of such credit shall not
24 be subject to taxation.
Req. No. 11253 Page 40
1 d. The provisions of this paragraph shall apply to all
2 taxable years ending after December 31, 1978, and
3 beginning before January 1, 2006.
4 8. Retirement benefits not to exceed Five Thousand Five Hundred
5 Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five
6 Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand
7 Dollars ($10,000.00) for the 2006 tax year and all subsequent tax
8 years, which are received by an individual from the civil service of
9 the United States, the Oklahoma Public Employees Retirement System,
10 the Teachers' Retirement System of Oklahoma, the Oklahoma Law
11 Enforcement Retirement System, the Oklahoma Firefighters Pension and
12 Retirement System, the Oklahoma Police Pension and Retirement
13 System, the employee retirement systems created by counties pursuant
14 to Section 951 et seq. of Title 19 of the Oklahoma Statutes, the
15 Uniform Retirement System for Justices and Judges, the Oklahoma
16 Wildlife Conservation Department Retirement Fund, the Oklahoma
17 Employment Security Commission Retirement Plan, or the employee
18 retirement systems created by municipalities pursuant to Section 48-
19 101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt
20 from taxable income.
21 9. In taxable years beginning after December 3l, 1984, Social
22 Security benefits received by an individual shall be exempt from
23 taxable income, to the extent such benefits are included in the
24
Req. No. 11253 Page 41
1 federal adjusted gross income pursuant to the provisions of Section
2 86 of the Internal Revenue Code, 26 U.S.C., Section 86.
3 10. For taxable years beginning after December 31, 1994, lump-
4 sum distributions from employer plans of deferred compensation,
5 which are not qualified plans within the meaning of Section 401(a)
6 of the Internal Revenue Code, 26 U.S.C., Section 401(a), and which
7 are deposited in and accounted for within a separate bank account or
8 brokerage account in a financial institution within this state,
9 shall be excluded from taxable income in the same manner as a
10 qualifying rollover contribution to an individual retirement account
11 within the meaning of Section 408 of the Internal Revenue Code, 26
12 U.S.C., Section 408. Amounts withdrawn from such bank or brokerage
13 account, including any earnings thereon, shall be included in
14 taxable income when withdrawn in the same manner as withdrawals from
15 individual retirement accounts within the meaning of Section 408 of
16 the Internal Revenue Code.
17 11. In taxable years beginning after December 31, 1995,
18 contributions made to and interest received from a medical savings
19 account established pursuant to Sections 2621 through 2623 of Title
20 63 of the Oklahoma Statutes shall be exempt from taxable income.
21 12. For taxable years beginning after December 31, 1996, the
22 Oklahoma adjusted gross income of any individual taxpayer who is a
23 swine or poultry producer may be further adjusted for the deduction
24 for depreciation allowed for new construction or expansion costs
Req. No. 11253 Page 42
1 which may be computed using the same depreciation method elected for
2 federal income tax purposes except that the useful life shall be
3 seven (7) years for purposes of this paragraph. If depreciation is
4 allowed as a deduction in determining the adjusted gross income of
5 an individual, any depreciation calculated and claimed pursuant to
6 this section shall in no event be a duplication of any depreciation
7 allowed or permitted on the federal income tax return of the
8 individual.
9 13. a. In taxable years beginning before January 1, 2005,
10 retirement benefits not to exceed the amounts
11 specified in this paragraph, which are received by an
12 individual sixty-five (65) years of age or older and
13 whose Oklahoma adjusted gross income is Twenty-five
14 Thousand Dollars ($25,000.00) or less if the filing
15 status is single, head of household, or married filing
16 separate, or Fifty Thousand Dollars ($50,000.00) or
17 less if the filing status is married filing joint or
18 qualifying widow, shall be exempt from taxable income.
19 In taxable years beginning after December 31, 2004,
20 retirement benefits not to exceed the amounts
21 specified in this paragraph, which are received by an
22 individual whose Oklahoma adjusted gross income is
23 less than the qualifying amount specified in this
24 paragraph, shall be exempt from taxable income.
Req. No. 11253 Page 43
1 b. For purposes of this paragraph, the qualifying amount
2 shall be as follows:
3 (1) in taxable years beginning after December 31,
4 2004, and prior to January 1, 2007, the
5 qualifying amount shall be Thirty-seven Thousand
6 Five Hundred Dollars ($37,500.00) or less if the
7 filing status is single, head of household, or
8 married filing separate, or Seventy-five Thousand
9 Dollars ($75,000.00) or less if the filing status
10 is married filing jointly or qualifying widow,
11 (2) in the taxable year beginning January 1, 2007,
12 the qualifying amount shall be Fifty Thousand
13 Dollars ($50,000.00) or less if the filing status
14 is single, head of household, or married filing
15 separate, or One Hundred Thousand Dollars
16 ($100,000.00) or less if the filing status is
17 married filing jointly or qualifying widow,
18 (3) in the taxable year beginning January 1, 2008,
19 the qualifying amount shall be Sixty-two Thousand
20 Five Hundred Dollars ($62,500.00) or less if the
21 filing status is single, head of household, or
22 married filing separate, or One Hundred Twenty-
23 five Thousand Dollars ($125,000.00) or less if
24
Req. No. 11253 Page 44
1 the filing status is married filing jointly or
2 qualifying widow,
3 (4) in the taxable year beginning January 1, 2009,
4 the qualifying amount shall be One Hundred
5 Thousand Dollars ($100,000.00) or less if the
6 filing status is single, head of household, or
7 married filing separate, or Two Hundred Thousand
8 Dollars ($200,000.00) or less if the filing
9 status is married filing jointly or qualifying
10 widow, and
11 (5) in the taxable year beginning January 1, 2010,
12 and subsequent taxable years, there shall be no
13 limitation upon the qualifying amount.
14 c. For purposes of this paragraph, "retirement benefits"
15 means the total distributions or withdrawals from the
16 following:
17 (1) an employee pension benefit plan which satisfies
18 the requirements of Section 401 of the Internal
19 Revenue Code, 26 U.S.C., Section 401,
20 (2) an eligible deferred compensation plan that
21 satisfies the requirements of Section 457 of the
22 Internal Revenue Code, 26 U.S.C., Section 457,
23 (3) an individual retirement account, annuity or
24 trust or simplified employee pension that
Req. No. 11253 Page 45
1 satisfies the requirements of Section 408 of the
2 Internal Revenue Code, 26 U.S.C., Section 408,
3 (4) an employee annuity subject to the provisions of
4 Section 403(a) or (b) of the Internal Revenue
5 Code, 26 U.S.C., Section 403(a) or (b),
6 (5) United States Retirement Bonds which satisfy the
7 requirements of Section 86 of the Internal
8 Revenue Code, 26 U.S.C., Section 86, or
9 (6) lump-sum distributions from a retirement plan
10 which satisfies the requirements of Section
11 402(e) of the Internal Revenue Code, 26 U.S.C.,
12 Section 402(e).
13 d. The amount of the exemption provided by this paragraph
14 shall be limited to Five Thousand Five Hundred Dollars
15 ($5,500.00) for the 2004 tax year, Seven Thousand Five
16 Hundred Dollars ($7,500.00) for the 2005 tax year and
17 Ten Thousand Dollars ($10,000.00) for the tax year
18 2006 and for all subsequent tax years. Any individual
19 who claims the exemption provided for in paragraph 8
20 of this subsection shall not be permitted to claim a
21 combined total exemption pursuant to this paragraph
22 and paragraph 8 of this subsection in an amount
23 exceeding Five Thousand Five Hundred Dollars
24 ($5,500.00) for the 2004 tax year, Seven Thousand Five
Req. No. 11253 Page 46
1 Hundred Dollars ($7,500.00) for the 2005 tax year and
2 Ten Thousand Dollars ($10,000.00) for the 2006 tax
3 year and all subsequent tax years.
4 14. In taxable years beginning after December 31, 1999, for an
5 individual engaged in production agriculture who has filed a
6 Schedule F form with the taxpayer's federal income tax return for
7 such taxable year, there shall be excluded from taxable income any
8 amount which was included as federal taxable income or federal
9 adjusted gross income and which consists of the discharge of an
10 obligation by a creditor of the taxpayer incurred to finance the
11 production of agricultural products.
12 15. In taxable years beginning December 31, 2000, an amount
13 equal to one hundred percent (100%) of the amount of any scholarship
14 or stipend received from participation in the Oklahoma Police Corps
15 Program, as established in Section 2-140.3 of Title 47 of the
16 Oklahoma Statutes shall be exempt from taxable income.
17 16. a. In taxable years beginning after December 31, 2001,
18 and before January 1, 2005, there shall be allowed a
19 deduction in the amount of contributions to accounts
20 established pursuant to the Oklahoma College Savings
21 Plan Act. The deduction shall equal the amount of
22 contributions to accounts, but in no event shall the
23 deduction for each contributor exceed Two Thousand
24
Req. No. 11253 Page 47
1 Five Hundred Dollars ($2,500.00) each taxable year for
2 each account.
3 b. In taxable years beginning after December 31, 2004,
4 each taxpayer shall be allowed a deduction for
5 contributions to accounts established pursuant to the
6 Oklahoma College Savings Plan Act. The maximum annual
7 deduction shall equal the amount of contributions to
8 all such accounts plus any contributions to such
9 accounts by the taxpayer for prior taxable years after
10 December 31, 2004, which were not deducted, but in no
11 event shall the deduction for each tax year exceed Ten
12 Thousand Dollars ($10,000.00) for each individual
13 taxpayer or Twenty Thousand Dollars ($20,000.00) for
14 taxpayers filing a joint return. Any amount of a
15 contribution that is not deducted by the taxpayer in
16 the year for which the contribution is made may be
17 carried forward as a deduction from income for the
18 succeeding five (5) years. For taxable years
19 beginning after December 31, 2005, deductions may be
20 taken for contributions and rollovers made during a
21 taxable year and up to April 15 of the succeeding
22 year, or the due date of a taxpayer's state income tax
23 return, excluding extensions, whichever is later.
24
Req. No. 11253 Page 48
1 Provided, a deduction for the same contribution may
2 not be taken for two (2) different taxable years.
3 c. In taxable years beginning after December 31, 2006,
4 deductions for contributions made pursuant to
5 subparagraph b of this paragraph shall be limited as
6 follows:
7 (1) for a taxpayer who qualified for the five-year
8 carryforward election and who takes a rollover or
9 nonqualified withdrawal during that period, the
10 tax deduction otherwise available pursuant to
11 subparagraph b of this paragraph shall be reduced
12 by the amount which is equal to the rollover or
13 nonqualified withdrawal, and
14 (2) for a taxpayer who elects to take a rollover or
15 nonqualified withdrawal within the same tax year
16 in which a contribution was made to the
17 taxpayer's account, the tax deduction otherwise
18 available pursuant to subparagraph b of this
19 paragraph shall be reduced by the amount of the
20 contribution which is equal to the rollover or
21 nonqualified withdrawal.
22 d. If a taxpayer elects to take a rollover on a
23 contribution for which a deduction has been taken
24 pursuant to subparagraph b of this paragraph within
Req. No. 11253 Page 49
1 one (1) year of the date of contribution, the amount
2 of such rollover shall be included in the adjusted
3 gross income of the taxpayer in the taxable year of
4 the rollover.
5 e. If a taxpayer makes a nonqualified withdrawal of
6 contributions for which a deduction was taken pursuant
7 to subparagraph b of this paragraph, such nonqualified
8 withdrawal and any earnings thereon shall be included
9 in the adjusted gross income of the taxpayer in the
10 taxable year of the nonqualified withdrawal.
11 f. As used in this paragraph:
12 (1) "non-qualified withdrawal" means a withdrawal
13 from an Oklahoma College Savings Plan account
14 other than one of the following:
15 (a) a qualified withdrawal,
16 (b) a withdrawal made as a result of the death
17 or disability of the designated beneficiary
18 of an account,
19 (c) a withdrawal that is made on the account of
20 a scholarship or the allowance or payment
21 described in Section 135(d)(1)(B) or (C) or
22 by the Internal Revenue Code, received by
23 the designated beneficiary to the extent the
24 amount of the refund does not exceed the
Req. No. 11253 Page 50
1 amount of the scholarship, allowance, or
2 payment, or
3 (d) a rollover or change of designated
4 beneficiary as permitted by subsection F of
5 Section 3970.7 of Title 70 of Oklahoma
6 Statutes, and
7 (2) "rollover" means the transfer of funds from the
8 Oklahoma College Savings Plan to any other plan
9 under Section 529 of the Internal Revenue Code.
10 17. For tax years 2006 through 2021, retirement benefits
11 received by an individual from any component of the Armed Forces of
12 the United States in an amount not to exceed the greater of seventy-
13 five percent (75%) of such benefits or Ten Thousand Dollars
14 ($10,000.00) shall be exempt from taxable income but in no case less
15 than the amount of the exemption provided by paragraph 13 of this
16 subsection. For tax year 2022 and subsequent tax years, retirement
17 benefits received by an individual from any component of the Armed
18 Forces of the United States shall be exempt from taxable income.
19 18. For taxable years beginning after December 31, 2006,
20 retirement benefits received by federal civil service retirees,
21 including survivor annuities, paid in lieu of Social Security
22 benefits shall be exempt from taxable income to the extent such
23 benefits are included in the federal adjusted gross income pursuant
24
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1 to the provisions of Section 86 of the Internal Revenue Code, 26
2 U.S.C., Section 86, according to the following schedule:
3 a. in the taxable year beginning January 1, 2007, twenty
4 percent (20%) of such benefits shall be exempt,
5 b. in the taxable year beginning January 1, 2008, forty
6 percent (40%) of such benefits shall be exempt,
7 c. in the taxable year beginning January 1, 2009, sixty
8 percent (60%) of such benefits shall be exempt,
9 d. in the taxable year beginning January 1, 2010, eighty
10 percent (80%) of such benefits shall be exempt, and
11 e. in the taxable year beginning January 1, 2011, and
12 subsequent taxable years, one hundred percent (100%)
13 of such benefits shall be exempt.
14 19. a. For taxable years beginning after December 31, 2007, a
15 resident individual may deduct up to Ten Thousand
16 Dollars ($10,000.00) from Oklahoma adjusted gross
17 income if the individual, or the dependent of the
18 individual, while living, donates one or more human
19 organs of the individual to another human being for
20 human organ transplantation. As used in this
21 paragraph, "human organ" means all or part of a liver,
22 pancreas, kidney, intestine, lung, or bone marrow. A
23 deduction that is claimed under this paragraph may be
24
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1 claimed in the taxable year in which the human organ
2 transplantation occurs.
3 b. An individual may claim this deduction only once, and
4 the deduction may be claimed only for unreimbursed
5 expenses that are incurred by the individual and
6 related to the organ donation of the individual.
7 c. The Oklahoma Tax Commission shall promulgate rules to
8 implement the provisions of this paragraph which shall
9 contain a specific list of expenses which may be
10 presumed to qualify for the deduction. The Tax
11 Commission shall prescribe necessary requirements for
12 verification.
13 20. For taxable years beginning after December 31, 2009, there
14 shall be exempt from taxable income any amount received by the
15 beneficiary of the death benefit for an emergency medical technician
16 or a registered emergency medical responder provided by Section 1-
17 2505.1 of Title 63 of the Oklahoma Statutes.
18 21. For taxable years beginning after December 31, 2008,
19 taxable income shall be increased by any unemployment compensation
20 exempted under Section 85(c) of the Internal Revenue Code, 26
21 U.S.C., Section 85(c)(2009).
22 22. For taxable years beginning after December 31, 2008, there
23 shall be exempt from taxable income any payment in an amount less
24 than Six Hundred Dollars ($600.00) received by a person as an award
Req. No. 11253 Page 53
1 for participation in a competitive livestock show event. For
2 purposes of this paragraph, the payment shall be treated as a
3 scholarship amount paid by the entity sponsoring the event and the
4 sponsoring entity shall cause the payment to be categorized as a
5 scholarship in its books and records.
6 23. For taxable years beginning on or after January 1, 2016,
7 taxable income shall be increased by any amount of state and local
8 sales or income taxes deducted under 26 U.S.C., Section 164 of the
9 Internal Revenue Code. If the amount of state and local taxes
10 deducted on the federal return is limited, taxable income on the
11 state return shall be increased only by the amount actually deducted
12 after any such limitations are applied.
13 24. For taxable years beginning after December 31, 2020, each
14 taxpayer shall be allowed a deduction for contributions to accounts
15 established pursuant to the Achieving a Better Life Experience
16 (ABLE) Program as established in Section 4001.1 et seq. of Title 56
17 of the Oklahoma Statutes. For any tax year, the deduction provided
18 for in this paragraph shall not exceed Ten Thousand Dollars
19 ($10,000.00) for an individual taxpayer or Twenty Thousand Dollars
20 ($20,000.00) for taxpayers filing a joint return. Any amount of
21 contribution not deducted by the taxpayer in the tax year for which
22 the contribution is made may be carried forward as a deduction from
23 income for up to five (5) tax years. Deductions may be taken for
24 contributions made during the tax year and through April 15 of the
Req. No. 11253 Page 54
1 succeeding tax year, or through the due date of a taxpayer's state
2 income tax return excluding extensions, whichever is later.
3 Provided, a deduction for the same contribution may not be taken in
4 more than one (1) tax year.
5 F. 1. For taxable years beginning after December 31, 2004, a
6 deduction from the Oklahoma adjusted gross income of any individual
7 taxpayer shall be allowed for qualifying gains receiving capital
8 treatment that are included in the federal adjusted gross income of
9 such individual taxpayer during the taxable year.
10 2. As used in this subsection:
11 a. "qualifying gains receiving capital treatment" means
12 the amount of net capital gains, as defined in Section
13 1222(11) of the Internal Revenue Code, included in an
14 individual taxpayer's federal income tax return that
15 result from:
16 (1) the sale of real property or tangible personal
17 property located within Oklahoma that has been
18 directly or indirectly owned by the individual
19 taxpayer for a holding period of at least five
20 (5) years prior to the date of the transaction
21 from which such net capital gains arise,
22 (2) the sale of stock or the sale of a direct or
23 indirect ownership interest in an Oklahoma
24 company, limited liability company, or
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1 partnership where such stock or ownership
2 interest has been directly or indirectly owned by
3 the individual taxpayer for a holding period of
4 at least two (2) years prior to the date of the
5 transaction from which the net capital gains
6 arise, or
7 (3) the sale of real property, tangible personal
8 property or intangible personal property located
9 within Oklahoma as part of the sale of all or
10 substantially all of the assets of an Oklahoma
11 company, limited liability company, or
12 partnership or an Oklahoma proprietorship
13 business enterprise where such property has been
14 directly or indirectly owned by such entity or
15 business enterprise or owned by the owners of
16 such entity or business enterprise for a period
17 of at least two (2) years prior to the date of
18 the transaction from which the net capital gains
19 arise,
20 b. "holding period" means an uninterrupted period of
21 time. The holding period shall include any additional
22 period when the property was held by another
23 individual or entity, if such additional period is
24
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1 included in the taxpayer's holding period for the
2 asset pursuant to the Internal Revenue Code,
3 c. "Oklahoma company," "limited liability company," or
4 "partnership" means an entity whose primary
5 headquarters have been located in Oklahoma for at
6 least three (3) uninterrupted years prior to the date
7 of the transaction from which the net capital gains
8 arise,
9 d. "direct" means the individual taxpayer directly owns
10 the asset,
11 e. "indirect" means the individual taxpayer owns an
12 interest in a pass-through entity (or chain of pass-
13 through entities) that sells the asset that gives rise
14 to the qualifying gains receiving capital treatment.
15 (1) With respect to sales of real property or
16 tangible personal property located within
17 Oklahoma, the deduction described in this
18 subsection shall not apply unless the pass-
19 through entity that makes the sale has held the
20 property for not less than five (5) uninterrupted
21 years prior to the date of the transaction that
22 created the capital gain, and each pass-through
23 entity included in the chain of ownership has
24 been a member, partner, or shareholder of the
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1 pass-through entity in the tier immediately below
2 it for an uninterrupted period of not less than
3 five (5) years.
4 (2) With respect to sales of stock or ownership
5 interest in or sales of all or substantially all
6 of the assets of an Oklahoma company, limited
7 liability company, partnership or Oklahoma
8 proprietorship business enterprise, the deduction
9 described in this subsection shall not apply
10 unless the pass-through entity that makes the
11 sale has held the stock or ownership interest for
12 not less than two (2) uninterrupted years prior
13 to the date of the transaction that created the
14 capital gain, and each pass-through entity
15 included in the chain of ownership has been a
16 member, partner or shareholder of the pass-
17 through entity in the tier immediately below it
18 for an uninterrupted period of not less than two
19 (2) years. For purposes of this division,
20 uninterrupted ownership prior to July 1, 2007,
21 shall be included in the determination of the
22 required holding period prescribed by this
23 division, and
24
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1 f. "Oklahoma proprietorship business enterprise" means a
2 business enterprise whose income and expenses have
3 been reported on Schedule C or F of an individual
4 taxpayer's federal income tax return, or any similar
5 successor schedule published by the Internal Revenue
6 Service and whose primary headquarters have been
7 located in Oklahoma for at least three (3)
8 uninterrupted years prior to the date of the
9 transaction from which the net capital gains arise.
10 G. 1. For purposes of computing its Oklahoma taxable income
11 under this section, the dividends-paid deduction otherwise allowed
12 by federal law in computing net income of a real estate investment
13 trust that is subject to federal income tax shall be added back in
14 computing the tax imposed by this state under this title if the real
15 estate investment trust is a captive real estate investment trust.
16 2. For purposes of computing its Oklahoma taxable income under
17 this section, a taxpayer shall add back otherwise deductible rents
18 and interest expenses paid to a captive real estate investment trust
19 that is not subject to the provisions of paragraph 1 of this
20 subsection. As used in this subsection:
21 a. the term "real estate investment trust" or "REIT"
22 means the meaning ascribed to such term in Section 856
23 of the Internal Revenue Code,
24
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1 b. the term "captive real estate investment trust" means
2 a real estate investment trust, the shares or
3 beneficial interests of which are not regularly traded
4 on an established securities market and more than
5 fifty percent (50%) of the voting power or value of
6 the beneficial interests or shares of which are owned
7 or controlled, directly or indirectly, or
8 constructively, by a single entity that is:
9 (1) treated as an association taxable as a
10 corporation under the Internal Revenue Code, and
11 (2) not exempt from federal income tax pursuant to
12 the provisions of Section 501(a) of the Internal
13 Revenue Code.
14 The term shall not include a real estate investment
15 trust that is intended to be regularly traded on an
16 established securities market, and that satisfies the
17 requirements of Section 856(a)(5) and (6) of the U.S.
18 Internal Revenue Code by reason of Section 856(h)(2)
19 of the Internal Revenue Code,
20 c. the term "association taxable as a corporation" shall
21 not include the following entities:
22 (1) any real estate investment trust as defined in
23 paragraph a of this subsection other than a
24 "captive real estate investment trust",
Req. No. 11253 Page 60
1 (2) any qualified real estate investment trust
2 subsidiary under Section 856(i) of the Internal
3 Revenue Code, other than a qualified REIT
4 subsidiary of a "captive real estate investment
5 trust",
6 (3) any Listed Australian Property Trust (meaning an
7 Australian unit trust registered as a "Managed
8 Investment Scheme" under the Australian
9 Corporations Act in which the principal class of
10 units is listed on a recognized stock exchange in
11 Australia and is regularly traded on an
12 established securities market), or an entity
13 organized as a trust, provided that a Listed
14 Australian Property Trust owns or controls,
15 directly or indirectly, seventy-five percent
16 (75%) or more of the voting power or value of the
17 beneficial interests or shares of such trust, or
18 (4) any Qualified Foreign Entity, meaning a
19 corporation, trust, association or partnership
20 organized outside the laws of the United States
21 and which satisfies the following criteria:
22 (a) at least seventy-five percent (75%) of the
23 entity's total asset value at the close of
24 its taxable year is represented by real
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1 estate assets, as defined in Section
2 856(c)(5)(B) of the Internal Revenue Code,
3 thereby including shares or certificates of
4 beneficial interest in any real estate
5 investment trust, cash and cash equivalents,
6 and U.S. Government securities,
7 (b) the entity receives a dividend-paid
8 deduction comparable to Section 561 of the
9 Internal Revenue Code, or is exempt from
10 entity level tax,
11 (c) the entity is required to distribute at
12 least eighty-five percent (85%) of its
13 taxable income, as computed in the
14 jurisdiction in which it is organized, to
15 the holders of its shares or certificates of
16 beneficial interest on an annual basis,
17 (d) not more than ten percent (10%) of the
18 voting power or value in such entity is held
19 directly or indirectly or constructively by
20 a single entity or individual, or the shares
21 or beneficial interests of such entity are
22 regularly traded on an established
23 securities market, and
24
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1 (e) the entity is organized in a country which
2 has a tax treaty with the United States.
3 3. For purposes of this subsection, the constructive ownership
4 rules of Section 318(a) of the Internal Revenue Code, as modified by
5 Section 856(d)(5) of the Internal Revenue Code, shall apply in
6 determining the ownership of stock, assets, or net profits of any
7 person.
8 4. A real estate investment trust that does not become
9 regularly traded on an established securities market within one (1)
10 year of the date on which it first becomes a real estate investment
11 trust shall be deemed not to have been regularly traded on an
12 established securities market, retroactive to the date it first
13 became a real estate investment trust, and shall file an amended
14 return reflecting such retroactive designation for any tax year or
15 part year occurring during its initial year of status as a real
16 estate investment trust. For purposes of this subsection, a real
17 estate investment trust becomes a real estate investment trust on
18 the first day it has both met the requirements of Section 856 of the
19 Internal Revenue Code and has elected to be treated as a real estate
20 investment trust pursuant to Section 856(c)(1) of the Internal
21 Revenue Code.
22 SECTION 3. This act shall become effective November 1, 2025.
23
24 60-1-11253 MAH 01/04/25
Req. No. 11253 Page 63Every fact on this page links to its source, starting with the official bill record.