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1 STATE OF OKLAHOMA
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2 2nd Session of the 60th Legislature (2026)
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3 SENATE BILL 1575 By: Kirt
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9 AS INTRODUCED
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10 An Act relating to incentives; amending 68 O.S. 2021,
10 Sections 3603, as amended by Section 1, Chapter 102,
11 O.S.L. 2025, 3604, as last amended by Section 157,
11 Chapter 452, O.S.L. 2024, 3604.1, 3606, as last
12 amended by Section 2, Chapter 29, 1st Extraordinary
12 Session, O.S.L. 2023, 3903, 3905, 3913, 3914, 3915,
13 and 4503, as amended by Section 1, Chapter 127,
13 O.S.L. 2025 (68 O.S. Supp. 2025, Sections 3603, 3604,
14 3606, and 4503), which relate to quality jobs
14 incentives; modifying maximum net benefit rate;
15 modifying wage requirement; modifying period for
15 filing a claim for rebate; updating statutory
16 language; updating statutory references; and
16 providing an effective date.
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22 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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1 SECTION 1. AMENDATORY 68 O.S. 2021, Section 3603, as
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2 amended by Section 1, Chapter 102, O.S.L. 2025 (68 O.S. Supp. 2025,
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3 Section 3603), is amended to read as follows:
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4 Section 3603. A. As used in the Oklahoma Quality Jobs Program
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5 Act:
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6 1. a. "Basic industry" means:
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7 (1) those manufacturing activities defined or
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8 classified in the NAICS Manual under Industry
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9 Sector Nos. 31, 32 and 33, Industry Group No.
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10 5111 or Industry No. 11331,
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11 (2) those electric power generation, transmission and
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12 distribution activities defined or classified in
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13 the NAICS Manual under U.S. Industry Nos. 221111
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14 through 221122, if:
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15 (a) an establishment engaged therein qualifies
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16 as an exempt wholesale generator as defined
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17 by 15 U.S.C., Section 79z-5a,
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18 (b) the exempt wholesale generator facility
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19 consumes from sources located within the
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20 state at least ninety percent (90%) of the
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21 total energy used to produce the electrical
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22 output which qualifies for the specialized
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23 treatment provided by the Energy Policy Act
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24 of 1992, P.L. 102-486, 106 Stat. 2776, as
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Req. No. 3277 Page 2
1 amended, and federal regulations adopted
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2 pursuant thereto,
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3 (c) the exempt wholesale generator facility
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4 sells to purchasers located outside the
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5 state for consumption in activities located
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6 outside the state at least ninety percent
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7 (90%) of the total electrical energy output
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8 which qualifies for the specialized
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9 treatment provided by the Energy Policy Act
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10 of 1992, P.L. 102-486, 106 Stat. 2776, as
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11 amended, and federal regulations adopted
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12 pursuant thereto, and
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13 (d) the facility is constructed on or after July
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14 1, 1996,
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15 (3) those administrative and facilities support
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16 service activities defined or classified in the
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17 NAICS Manual under Industry Group Nos. 5611 and
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18 5612, Industry Nos. 51821, 519130, 52232 and
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19 56142 or U.S. Industry Nos. 524291 and 551114,
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20 those other support activities for air
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21 transportation defined or classified in the NAICS
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22 Manual under Industry Group No. 488190, and those
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23 support, repair, and maintenance service
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24 activities for the wind industry defined or
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Req. No. 3277 Page 3
1 classified in the NAICS Manual under Industry
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2 Group No. 811310,
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3 (4) those professional, scientific and technical
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4 service activities defined or classified in the
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5 NAICS Manual under U.S. Industry Nos. 541710 and
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6 541380,
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7 (5) distribution centers for retail or wholesale
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8 businesses defined or classified in the NAICS
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9 Manual under Sector No. 42, if forty percent
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10 (40%) or more of the inventory processed through
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11 such warehouse is shipped out-of-state,
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12 (6) those adjustment and collection service
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13 activities defined or classified in the NAICS
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14 Manual under U.S. Industry No. 561440, if
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15 seventy-five percent (75%) of the loans to be
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16 serviced were made by out-of-state debtors,
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17 (7) (a) those air transportation activities defined
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18 or classified in the NAICS Manual under
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19 Industry Group No. 4811, if the following
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20 facilities are located in this state:
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21 (i) the corporate headquarters of an
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22 establishment classified therein, and
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23 (ii) a facility or facilities at which
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24 reservations for transportation
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Req. No. 3277 Page 4
1 provided by such an establishment are
1 processed, whether such services are
2 performed by employees of the
2 establishment, by employees of a
3 subsidiary of or other entity
3 affiliated with the establishment or by
4 employees of an entity with whom the
4 establishment has contracted for the
5 performance of such services; provided,
5 this provision shall not disqualify an
6 establishment which uses an out-of-
6 state entity or employees for some
7 reservations services, or
7 (b) those air transportation activities defined
8 or classified in the NAICS Manual under
8 Industry Group No. 4811, if an establishment
9 classified therein has or will have within
9 one (1) year sales of at least seventy-five
10 percent (75%) of its total sales, as
10 determined by the Incentive Approval
11 Committee pursuant to the provisions of
11 subsection B of this section, to out-of-
12 state customers or buyers, to in-state
12 customers or buyers if the product or
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Req. No. 3277
1 service is resold by the purchaser to an
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2 out-of-state customer or buyer for ultimate
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3 use, or to the federal government,
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4 (8) flight training services activities defined or
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5 classified in the NAICS Manual under U.S.
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6 Industry Group No. 611512, which for purposes of
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7 the Oklahoma Quality Jobs Program Act shall
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8 include new direct jobs for which gross payroll
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9 existed on or after January 1, 2003, as
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10 identified in the NAICS Manual,
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11 (9) the following, if an establishment classified
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12 therein has or will have within one (1) year
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13 sales of at least seventy-five percent (75%) of
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14 its total sales, as determined by the Incentive
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15 Approval Committee pursuant to the provisions of
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16 subsection B of this section, to out-of-state
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17 customers or buyers, to in-state customers or
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18 buyers if the product or service is resold by the
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19 purchaser to an out-of-state customer or buyer
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20 for ultimate use, or to the federal government:
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21 (a) those transportation and warehousing
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22 activities defined or classified in the
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23 NAICS Manual under Industry Subsector No.
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24 493, if not otherwise listed in this
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1 paragraph, Industry Subsector Nos. 482 and
1 484 and Industry Group Nos. 4884 through
2 4889,
2 (b) those passenger transportation activities
3 defined or classified in the NAICS Manual
3 under Industry Nos. 561510 and 561599,
4 (c) those freight or cargo transportation
4 activities defined or classified in the
5 NAICS Manual under Industry No. 541614,
5 (d) those insurance activities defined or
6 classified in the NAICS Manual under
6 Industry Group No. 5241,
7 (e) those services to dwellings and other
7 buildings, as defined or classified in the
8 NAICS Manual under Industry Group No. 5617,
8 excluding U.S. Industry Nos. 561730, 56171,
9 56172, 56174 and 56179,
9 (f) those equipment rental and leasing
10 activities defined or classified in the
10 NAICS Manual under Industry Group No. 5324,
11 (g) those information technology and other
11 computer-related service activities defined
12 or classified in the NAICS Manual under
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1 Industry Group Nos. 5112, 5182, 5191 and
1 5415,
2 (h) those business support service activities
2 defined or classified in the NAICS Manual
3 under U.S. Industry Nos. 561410 through
3 561430, excluding 56143, and Industry No.
4 51911,
4 (i) those medical and diagnostic laboratory
5 activities defined or classified in the
5 NAICS Manual under Industry Group No. 6215,
6 (j) those professional, scientific and technical
6 service activities defined or classified in
7 the NAICS Manual under Industry Group Nos.
7 5412, 5414, 5415, 5416 and 5417, Industry
8 Nos. 54131, 54133, 54136 and 54137, and U.S.
8 Industry No. 541990, if not otherwise listed
9 in this paragraph,
9 (k) those communication service activities
10 defined or classified in the NAICS Manual
10 under Industry Nos. 51741 and 51791,
11 (l) those refuse systems activities defined or
11 classified in the NAICS Manual under
12 Industry Group No. 5622, provided that the
12 establishment is primarily engaged in the
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Req. No. 3277
1 capture and distribution of methane gas
1 produced within a landfill,
2 (m) general wholesale distribution of groceries,
2 defined or classified in the NAICS Manual
3 under Industry Group Nos. 4244 and 4245,
3 (n) those activities relating to processing of
4 insurance claims, defined or classified in
4 the NAICS Manual under U.S. Industry Nos.
5 524210 and 524292; provided, activities
5 described in U.S. Industry Nos. 524210 and
6 524292 in the NAICS Manual other than
6 processing of insurance claims shall not be
7 included for purposes of this subdivision,
7 (o) those agricultural activities classified in
8 the NAICS Manual under U.S. Industry Nos.
8 112120 and 112310,
9 (p) those professional organization activities
9 classified in the NAICS Manual under U.S.
10 Industry No. 813920,
10 (q) alternative energy structure construction
11 classified in the NAICS Manual under U.S.
11 Industry No. 237130,
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Req. No. 3277
1 (r) solar reflective coating application
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2 classified in the NAICS Manual under U.S.
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3 Industry No. 238160,
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4 (s) solar heating equipment installation
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5 classified in the NAICS Manual under U.S.
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6 Industry No. 238220,
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7 (t) those wired telecommunications carriers
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8 classified in the NAICS Manual under U.S.
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9 Industry No. 517110, and
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10 (u) those securities, commodity contracts and
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11 investment activities classified in the
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12 NAICS Manual under Industry Subsector No.
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13 523,
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14 (10) those activities related to extraction or
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15 pipeline transportation of petroleum, natural gas
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16 or refined petroleum products, defined or
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17 classified in the NAICS Manual under Industry
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18 Group No. 2111, 213111, 213112 or 486, subject to
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19 the limitations provided in paragraph 3 of this
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20 subsection and paragraph 3 of subsection B of
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21 this section,
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22 (11) those activities performed by the federal
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23 civilian workforce at a facility of the Federal
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24 Aviation Administration located in this state if
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Req. No. 3277 Page 10
1 the Director of the Oklahoma Department of
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2 Commerce determines or is notified that the
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3 federal government is soliciting proposals or
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4 otherwise inviting states to compete for
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5 additional federal civilian employment or
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6 expansion of federal civilian employment at such
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7 facilities,
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8 (12) those activities defined or classified in the
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9 NAICS Manual under U.S. Industry No. 711211 (2007
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10 version),
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11 (13) those real estate or brokerage activities
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12 classified in the NAICS Manual under U.S.
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13 Industry No. 53120 for which at least seventy-
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14 five percent (75%) of the establishment's
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15 revenues are attributed to out-of-state sales and
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16 at least seventy-five percent (75%) of the real
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17 estate transactions generating those revenues are
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18 attributed to real property located outside the
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19 State of Oklahoma, or
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20 (14) those support activities for rail transportation
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21 and those support activities for water
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22 transportation defined or classified in the NAICS
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23 Manual under U.S. Industry Nos. 4882 and 4883.
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Req. No. 3277 Page 11
1 b. An establishment described in subparagraph a of this
1
2 paragraph shall not be considered to be engaged in a
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3 basic industry unless it offers, or will offer within
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4 one hundred eighty (180) days of employment, a basic
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5 health benefits plan to the individuals it employs in
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6 new direct jobs in this state which is determined by
6
7 the Oklahoma Department of Commerce to consist of the
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8 following elements or elements substantially
8
9 equivalent thereto:
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10 (1) not more than fifty percent (50%) of the premium
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11 shall be paid by the employee,
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12 (2) coverage for basic hospital care,
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13 (3) coverage for physician care,
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14 (4) coverage for mental health care,
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15 (5) coverage for substance abuse treatment,
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16 (6) coverage for prescription drugs, and
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17 (7) coverage for prenatal care;
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18 2. "Change-in-control event" means the transfer to one or more
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19 unrelated establishments or unrelated persons, of either:
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20 a. beneficial ownership of more than fifty percent (50%)
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21 in value and more than fifty percent (50%) in voting
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22 power of the outstanding equity securities of the
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23 transferred establishment, or
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Req. No. 3277 Page 12
1 b. more than fifty percent (50%) in value of the assets
1
2 of an establishment.
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3 A transferor shall be treated as related to a transferee if more
3
4 than fifty percent (50%) of the voting interests of the transferor
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5 and transferee are owned, directly or indirectly, by the other or
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6 are owned, directly or indirectly, by the same person or persons,
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7 unless such transferred establishment has an outstanding class of
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8 equity securities registered under Sections 12(b) or 15(d) of the
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9 Securities Exchange Act of 1934, as amended, in which event the
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10 transferor and transferee will be treated as unrelated; provided, an
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11 establishment applying for the Oklahoma Quality Jobs Program Act as
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12 a result of a change-in-control event is required to apply within
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13 one hundred eighty (180) days of the change-in-control event to
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14 qualify for consideration. An establishment entering the Oklahoma
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15 Quality Jobs Program Act as the result of a change-in-control event
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16 shall be required to maintain a level of new direct jobs as agreed
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17 to in its contract with the Oklahoma Department of Commerce and to
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18 pay new direct jobs an average annualized wage which equals or
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19 exceeds one hundred twenty-five percent (125%) of the average county
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20 wage as that percentage is determined by the Oklahoma Department of
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21 Commerce based upon the most recent U.S. Department of Commerce data
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22 for the county in which the new jobs are located. For purposes of
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23 this paragraph, healthcare premiums paid by the applicant for
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24 individuals in new direct jobs shall not be included in the
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Req. No. 3277 Page 13
1 annualized wage. Such establishment entering the Oklahoma Quality
1
2 Jobs Program Act as the result of a change-in-control event shall be
2
3 required to retain the contracted average annualized wage and
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4 maintain the contracted maintenance level of new direct jobs numbers
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5 as certified by the Tax Commission. If the required average
5
6 annualized wage or the required new direct jobs numbers do not equal
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7 or exceed such contracted level during any quarter, the quarterly
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8 incentive payments shall not be made and shall not be resumed until
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9 such time as such requirements are met. An establishment described
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10 in this paragraph shall be required to repay all incentive payments
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11 received under the Oklahoma Quality Jobs Program Act if the
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12 establishment is determined by the Tax Commission to no longer have
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13 business operations in the state within three (3) years from the
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14 beginning of the calendar quarter for which the first incentive
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15 payment claim is filed;
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16 3. "New direct job":
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17 a. means full-time-equivalent employment in this state in
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18 an establishment which has qualified to receive an
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19 incentive payment pursuant to the provisions of the
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20 Oklahoma Quality Jobs Program Act which employment did
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21 not exist in this state prior to the date of approval
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22 by the Department of the application of the
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23 establishment pursuant to the provisions of Section
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24 3604 of this title and with respect to an
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Req. No. 3277 Page 14
1 establishment qualifying for incentive payments
1
2 pursuant to division (12) of subparagraph a of
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3 paragraph 1 of this subsection shall not include
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4 compensation paid to an employee or independent
4
5 contractor for an athletic contest conducted in the
5
6 state if the compensation is paid by an entity that
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7 does not have its principal place of business in the
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8 state or that does not own real or personal property
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9 having a market value of at least One Million Dollars
9
10 ($1,000,000.00) located in the state, and the
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11 employees or independent contractors of such entity
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12 are compensated to compete against the employees or
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13 independent contractors of an establishment that
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14 qualifies for incentive payments pursuant to division
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15 (12) of subparagraph a of paragraph 1 of this
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16 subsection and which is organized under Oklahoma law
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17 or that is lawfully registered to do business in the
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18 state and which does have its principal place of
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19 business located in the state and owns real or
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20 personal property having a market value of at least
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21 One Million Dollars ($1,000,000.00) located in the
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22 state; provided, that if an application of an
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23 establishment is approved by the Oklahoma Department
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24 of Commerce after a change-in-control event and the
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Req. No. 3277 Page 15
1 Director of the Oklahoma Department of Commerce
1
2 determines that the jobs located at such establishment
2
3 are likely to leave the state, "new direct job" shall
3
4 include employment that existed in this state prior to
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5 the date of application which is retained in this
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6 state by the new establishment following a change in
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7 control event, if such job otherwise qualifies as a
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8 new direct job, and
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9 b. shall include full-time-equivalent employment in this
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10 state of employees who are employed by an employment
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11 agency or similar entity other than the establishment
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12 which has qualified to receive an incentive payment
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13 and who are leased or otherwise provided under
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14 contract to the qualified establishment, if such job
14
15 did not exist in this state prior to the date of
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16 approval by the Department of the application of the
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17 establishment or the job otherwise qualifies as a new
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18 direct job following a change-in-control event. The
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19 leasing of employees by the establishment or employees
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20 provided under contract with an establishment shall
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21 constitute an employer-employee relationship between
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22 those employees and the establishment. A job shall be
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23 deemed to exist in this state prior to approval of an
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24 application if the activities and functions for which
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Req. No. 3277 Page 16
1 the particular job exists have been ongoing at any
1
2 time within six (6) months prior to such approval.
2
3 With respect to establishments defined in division
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4 (10) of subparagraph a of paragraph 1 of this
4
5 subsection, new direct jobs shall be limited to those
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6 jobs directly comprising the corporate headquarters of
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7 or directly relating to manufacturing, maintenance,
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8 administrative, financial, engineering, surveying,
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9 geological or geophysical services performed by the
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10 establishment. Under no circumstances shall
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11 employment relating to field services be considered
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12 new direct jobs;
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13 4. "Estimated direct state benefits" means the tax revenues
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14 projected by the Department to accrue to the state as a result of
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15 new direct jobs;
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16 5. "Estimated direct state costs" means the costs projected by
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17 the Department to accrue to the state as a result of new direct
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18 jobs. Such costs shall include, but not be limited to:
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19 a. the costs of education of new state resident children,
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20 b. the costs of public health, public safety and
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21 transportation services to be provided to new state
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22 residents,
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23 c. the costs of other state services to be provided to
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24 new state residents, and
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Req. No. 3277 Page 17
1 d. the costs of other state services;
1
2 6. "Estimated net direct state benefits" means the estimated
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3 direct state benefits less the estimated direct state costs;
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4 7. "Net benefit rate" means the estimated net direct state
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5 benefits computed as a percentage of gross payroll; provided:
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6 a. except as otherwise provided in this paragraph, the
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7 net benefit rate may be variable and shall not exceed
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8 five percent (5%) the highest rate of income tax
8
9 imposed upon the Oklahoma taxable income of
9
10 individuals pursuant to subsection D of Section 2355
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11 of this title. Any change in the highest rate of
11
12 individual income tax imposed pursuant to the
12
13 provisions of Section 2355 of this title shall be
13
14 applicable to the computation of incentive payments to
14
15 an establishment and shall be effective for purposes
15
16 of incentive payments based on payroll paid by an
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17 establishment on or after January 1 of any applicable
17
18 year for which the net benefit rate is modified as
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19 required by this subparagraph, and
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20 b. the net benefit rate shall not exceed six percent (6%)
20
21 in connection with an establishment which is owned and
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22 operated by an entity which has been awarded a United
22
23 States Department of Defense contract for which:
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Req. No. 3277 Page 18
1 (1) bids were solicited and accepted by the United
1
2 States Department of Defense from facilities
2
3 located outside this state,
3
4 (2) the term is or is renewable for not less than
4
5 twenty (20) years, and
5
6 (3) the average annual salary, excluding benefits
6
7 which are not subject to Oklahoma income taxes,
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8 for new direct jobs created as a direct result of
8
9 the awarding of the contract is projected by the
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10 Oklahoma Department of Commerce to equal or
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11 exceed Forty Thousand Dollars ($40,000.00) within
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12 three (3) years of the date of the first
12
13 incentive payment,
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14 c. except as otherwise provided in subparagraph d of this
14
15 paragraph, in no event shall incentive payments,
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16 cumulatively, exceed the estimated net direct state
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17 benefits,
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18 d. the net benefit rate shall be five percent (5%) for an
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19 establishment locating:
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20 (1) in an opportunity zone located in a high-
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21 employment county, as such terms are defined in
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22 subsection G of Section 3604 of this title, or
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23 (2) in a county in which:
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Req. No. 3277 Page 19
1 (a) the per capita personal income, as
1
2 determined by the Department, is eighty-five
2
3 percent (85%) or less of the statewide
3
4 average per capita personal income,
4
5 (b) the population has decreased over the
5
6 previous ten (10) years, as determined by
6
7 the Oklahoma Department of Commerce based on
7
8 the most recent U.S. Department of Commerce
8
9 data, or
9
10 (c) the unemployment rate exceeds the lesser of
10
11 five percent (5%) or two percentage points
11
12 above the state average unemployment rate as
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13 certified by the Oklahoma Employment
13
14 Security Commission,
14
15 e. the net benefit rate shall not exceed six percent (6%)
15
16 in connection with an establishment which:
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17 (1) is, as of the date of application, receiving
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18 incentive payments pursuant to the Oklahoma
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19 Quality Jobs Program Act and has been receiving
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20 such payments for at least one (1) year prior to
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21 the date of application, and
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22 (2) expands its operations in this state by creating
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23 additional new direct jobs which pay average
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24 annualized wages which equal or exceed one
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Req. No. 3277 Page 20
1 hundred fifty percent (150%) of the average
1
2 annualized wages of new direct jobs on which
2
3 incentive payments were received during the
3
4 preceding calendar year,
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5 f. with respect to an establishment defined or classified
5
6 in the NAICS Manual under U.S. Industry No. 711211
6
7 (2007 version) or any establishment defined or
7
8 classified in the NAICS Manual as a U.S. Industry
8
9 Number which is not included within the definition of
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10 "basic industry" as such term is defined in this
10
11 section on April 17, 2008, the net benefit rate shall
11
12 not exceed the highest rate of income tax imposed upon
12
13 the Oklahoma taxable income of individuals pursuant to
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14 subparagraph (g) or subparagraph (h), as applicable,
14
15 of paragraph 1 and paragraph 2 of subsection B of
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16 Section 2355 of this title. Any change in such
16
17 highest rate of individual income tax imposed pursuant
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18 to the provisions of Section 2355 of this title shall
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19 be applicable to the computation of incentive payments
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20 to an establishment as described by this subparagraph
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21 and shall be effective for purposes of incentive
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22 payments based on payroll paid by such establishment
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23 on or after January 1 of any applicable year for which
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Req. No. 3277 Page 21
1 the net benefit rate is modified as required by this
1
2 subparagraph, and
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3 g. the net benefit rate shall not exceed six percent (6%)
3
4 in connection with an establishment which employs
4
5 United States military veterans in at least ten
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6 percent (10%) of its gross payroll. The net benefit
6
7 rate for an establishment which employs United States
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8 military veterans in at least ten percent (10%) of its
8
9 payroll shall not be lower than five percent (5%).
9
10 Incentive payments made pursuant to the provisions of this
10
11 subparagraph shall be based upon payroll associated with such new
11
12 direct jobs. For purposes of this subparagraph, the amount of
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13 health insurance premiums or other benefits paid by the
13
14 establishment shall not be included for purposes of computation of
14
15 the average annualized wage;
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16 8. "Gross payroll" means wages, as defined in Section 2385.1 of
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17 this title for new direct jobs;
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18 9. a. "Establishment" means any business or governmental
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19 entity, no matter what legal form, including, but not
19
20 limited to, a sole proprietorship; partnership;
20
21 limited liability company; corporation or combination
21
22 of corporations which have a central parent
22
23 corporation which makes corporate management decisions
23
24 such as those involving consolidation, acquisition,
24
Req. No. 3277 Page 22
1 merger or expansion; federal agency; political
1
2 subdivision of the State of Oklahoma; or trust
2
3 authority; provided, distinct, identifiable subunits
3
4 of such entities may be determined to be an
4
5 establishment, for all purposes of the Oklahoma
5
6 Quality Jobs Program Act, by the Department subject to
6
7 the following conditions:
7
8 (1) within three (3) years of the first complete
8
9 calendar quarter following the start date, the
9
10 entity must have a minimum payroll of Two Million
10
11 Five Hundred Thousand Dollars ($2,500,000.00) and
11
12 the subunit must also have or will have a minimum
12
13 payroll of Two Million Five Hundred Thousand
13
14 Dollars ($2,500,000.00),
14
15 (2) the subunit is engaged in an activity or service
15
16 or produces a product which is demonstratively
16
17 independent and separate from the entity's other
17
18 activities, services or products and could be
18
19 conducted or produced in the absence of any other
19
20 activity, service or production of the entity,
20
21 (3) has an accounting system capable of tracking or
21
22 facilitating an audit of the subunit's payroll,
22
23 expenses, revenue and production. Limited
23
24 interunit overlap of administrative and
24
Req. No. 3277 Page 23
1 purchasing functions shall not disqualify a
1
2 subunit from consideration as an establishment by
2
3 the Department,
3
4 (4) the entity has not previously had a subunit
4
5 determined to be an establishment pursuant to
5
6 this section; provided, the restriction set forth
6
7 in this division shall not apply to subunits
7
8 which qualify pursuant to the provisions of
8
9 subparagraph b of paragraph 7 of this subsection,
9
10 and
10
11 (5) it is determined by the Department that the
11
12 entity will have a probable net gain in total
12
13 employment within the incentive period.
13
14 b. The Department may promulgate rules to further limit
14
15 the circumstances under which a subunit may be
15
16 considered an establishment. The Department shall
16
17 promulgate rules to determine whether a subunit of an
17
18 entity achieves a net gain in total employment. The
18
19 Department shall establish criteria for determining
19
20 the period of time within which such gain must be
20
21 demonstrated and a method for determining net gain in
21
22 total employment;
22
23 10. "NAICS Manual" means any manual, book or other publication
23
24 containing the North American Industry Classification System, United
24
Req. No. 3277 Page 24
1 States, 1997, promulgated by the Office of Management and Budget of
1
2 the United States of America, or the latest revised edition;
2
3 11. "Qualified federal contract" means a contract between an
3
4 agency or instrumentality of the United States government, including
4
5 but not limited to the Department of Defense or any branch of the
5
6 United States Armed Forces, but exclusive of any contract performed
6
7 for the Federal Emergency Management Agency as a direct result of a
7
8 natural disaster declared by the Governor or the President of the
8
9 United States with respect to damage to property located in Oklahoma
9
10 or loss of life or personal injury to persons in Oklahoma, and a
10
11 lawfully recognized business entity, whether or not the business
11
12 entity is organized under the laws of the State of Oklahoma or
12
13 whether or not the principal place of business of the business
13
14 entity is located within the State of Oklahoma, for the performance
14
15 of services, including but not limited to testing, research,
15
16 development, consulting or other services in a basic industry, if
16
17 the contract involves the performance of such services performed on
17
18 or after July 1, 2009, by the employees of the business entity
18
19 within the State of Oklahoma or if the contract involves the
19
20 performance of such services performed on or after July 1, 2009, by
20
21 employees of a lawfully recognized business entity that is a
21
22 subcontractor of the business entity with which the prime contract
22
23 has been formed. A qualified federal contract described in this
23
24 paragraph shall not qualify unless both the qualified federal
24
Req. No. 3277 Page 25
1 contractor and any subcontractors originally involved in the work or
1
2 added subsequently during the period of performance verify to the
2
3 qualified federal contractor verifier that it offers, or will offer
3
4 within one hundred eighty (180) days of employment of its respective
4
5 employees, a basic health benefits plan as described in subparagraph
5
6 b of paragraph 1 of this subsection to individuals who perform
6
7 qualified labor hours in this state;
7
8 12. "Qualified federal contractor verifier" means a nonprofit
8
9 entity organized under the laws of the State of Oklahoma, having an
9
10 affiliation with a comprehensive university which is part of The
10
11 Oklahoma State System of Higher Education, and having the following
11
12 characteristics:
12
13 a. established multiyear classified and unclassified
13
14 indefinite-delivery/indefinite-quantity federal
14
15 contract vehicles in excess of Fifty Million Dollars
15
16 ($50,000,000.00),
16
17 b. current capability to sponsor and maintain personnel
17
18 security clearances and authorized by the federal
18
19 government to handle and perform classified work up to
19
20 the Top Secret Sensitive Compartmented Information
20
21 levels,
21
22 c. at least one on-site federally certified Sensitive
22
23 Compartmented Information Facility,
23
24
24
Req. No. 3277 Page 26
1 d. on-site secure mass data storage complex with the
1
2 capability of isolating, segregating and protecting
2
3 corporate proprietary and classified information,
3
4 e. trusted agent status by maintaining no ownership of,
4
5 vested interest in, nor royalty production from any
5
6 intellectual property,
6
7 f. at least one hundred thousand (100,000) square feet of
7
8 configurable laboratory and support space,
8
9 g. the direct access to restricted air space through a
9
10 formalized memorandum of agreement with the Department
10
11 of Defense,
11
12 h. at least five thousand (5,000) acres available for
12
13 outdoor testing and training facilities, and
13
14 i. the ability to house state-of-the-art surety
14
15 facilities, including chemical, biological,
15
16 radiological, explosives, electronics, and unmanned
16
17 systems laboratories and ranges;
17
18 13. "SIC Manual" means the 1987 revision to the Standard
18
19 Industrial Classification Manual, promulgated by the Office of
19
20 Management and Budget of the United States of America;
20
21 14. "Start date" means the date on which an establishment may
21
22 begin accruing benefits for the creation of new direct jobs, which
22
23 date shall be determined by the Department;
23
24
24
Req. No. 3277 Page 27
1 15. "Effective date" means the date of approval of a contract
1
2 under which incentive payments will be made pursuant to the Oklahoma
2
3 Quality Jobs Program Act, which shall be the date the signed and
3
4 accepted incentive contract is received by the Department; provided,
4
5 an approved project may have a start date which is different from
5
6 the effective date;
6
7 16. "Total qualified labor hours" means the reimbursed payment
7
8 amount for hours of work performed by the State of Oklahoma
8
9 workforce of a qualified federal contractor or the State of Oklahoma
9
10 workforce of a subcontractor of a qualified federal contractor and
10
11 which are required for the full performance of a qualified federal
11
12 contract;
12
13 17. "Qualified labor rate" means the fully reimbursed labor
13
14 rate paid through a qualified federal contract for qualified labor
14
15 hours to the qualified federal contractor or subcontractor;
15
16 18. "Qualified federal contractor" means a business entity:
16
17 a. maintaining a prime contract with the federal
17
18 government as defined in paragraph 11 of this
18
19 subsection,
19
20 b. providing notice of intent to apply to the Department
20
21 within one hundred eighty (180) days of July 1, 2010,
21
22 or one hundred eighty (180) days of the date of the
22
23 award of a qualified federal contract or award of a
23
24
24
Req. No. 3277 Page 28
1 new qualified subcontract under an existing qualified
1
2 federal contract, and
2
3 c. adding substantively to the contract by performing at
3
4 least eight percent (8%) of the total labor whether
4
5 qualified and nonqualified labor as determined by the
5
6 federal contractor verifier on a direct contract or
6
7 individual task order or delivery order on an
7
8 indefinite-delivery/indefinite-quantity or other
8
9 blanket contract vehicle.
9
10 Should a prime contractor provide notice to the Department of
10
11 its intent not to apply for incentive for a qualified federal
11
12 contract or fails to qualify under the criteria above,
12
13 subcontractors in order of tier ranking as determined by the federal
13
14 contract verifier may assume the role of the prime and apply to
14
15 become a qualified federal contractor provided the entity meets the
15
16 same criteria above with the exception that notice of intent to
16
17 apply with the Department must be provided within sixty (60) days of
17
18 the prime's disqualification or one hundred eighty (180) days of the
18
19 award of its subcontract, whichever is later; and
19
20 19. "Proxy establishment" means a public trust which:
20
21 a. is organized and existing under Section 176 of Title
21
22 60 of the Oklahoma Statutes for the benefit of a
22
23 geographic area which includes a city or county or
23
24 some combination thereof, and
24
Req. No. 3277 Page 29
1 b. benefits a geographic area where new direct jobs which
1
2 meet the requirements of the Oklahoma Quality Jobs
2
3 Program Act are created by an establishment, other
3
4 than the proxy establishment, which is a branch of the
4
5 Armed Forces of the United States.
5
6 A proxy establishment may be determined to be an establishment
6
7 for all purposes of the Oklahoma Quality Jobs Program Act by the
7
8 Department and incentive payments may be made to such proxy
8
9 establishment for new direct jobs otherwise qualified pursuant to
9
10 the Oklahoma Quality Jobs Program Act. The Department may
10
11 promulgate rules to further specify the circumstances under which a
11
12 proxy establishment may be considered an establishment for the
12
13 purposes of making application for incentive payments pursuant to
13
14 the Oklahoma Quality Jobs Program Act. Provided however, that with
14
15 respect to any data on qualifying direct new jobs from a branch of
15
16 the Armed Forces of the United States, such rules shall only require
16
17 a proxy establishment to provide such data as would otherwise be
17
18 publicly releasable by the branch of the Armed Forces of the United
18
19 States.
19
20 B. The Incentive Approval Committee is hereby created and shall
20
21 consist of the Director of the Office of Management and Enterprise
21
22 Services, the Director of the Department and one member of the
22
23 Oklahoma Tax Commission appointed by the Tax Commission, or a
23
24 designee from each agency approved by such member. It shall be the
24
Req. No. 3277 Page 30
1 duty of the Committee to determine the eligibility of all applicants
1
2 for the Oklahoma Quality Jobs Program Act, subject to the applicable
2
3 requirements.
3
4 C. For an establishment defined as a "basic industry" pursuant
4
5 to division (4) of subparagraph a of paragraph 1 of subsection A of
5
6 this section, the Incentive Approval Committee shall consist of the
6
7 members provided by subsection B of this section and the Executive
7
8 Director of the Oklahoma Center for the Advancement of Science and
8
9 Technology, or a designee from the Center appointed by the Executive
9
10 Director.
10
11 SECTION 2. AMENDATORY 68 O.S. 2021, Section 3604, as
11
12 last amended by Section 157, Chapter 452, O.S.L. 2024 (68 O.S. Supp.
12
13 2025, Section 3604), is amended to read as follows:
13
14 Section 3604. A. Except as otherwise provided in subsection I
14
15 or subsection L of this section, an establishment which meets the
15
16 qualifications specified in the Oklahoma Quality Jobs Program Act
16
17 may receive quarterly incentive payments for a ten-year period from
17
18 the Oklahoma Tax Commission pursuant to the provisions of the
18
19 Oklahoma Quality Jobs Program Act; provided, such an establishment
19
20 defined or classified in the NAICS North American Industry
20
21 Classification System (NAICS) Manual under U.S. Industry No. 711211
21
22 (2007 version) may receive quarterly incentive payments for a
22
23 thirty-year period. The amount of such payments shall be equal to
23
24 the net benefit rate multiplied by the actual gross payroll of new
24
Req. No. 3277 Page 31
1 direct jobs for a calendar quarter as verified by the Oklahoma
1
2 Employment Security Commission. For an establishment defined or
2
3 classified in the NAICS Manual under U.S. Industry No. 711211 (2007
3
4 version) that entered into a contract pursuant to the Oklahoma
4
5 Quality Jobs Program Act with the Oklahoma Department of Commerce
5
6 before the effective date of this act November 1, 2023:
6
7 1. The contract shall be extended from fifteen (15) years to
7
8 thirty (30) years; and
8
9 2. The extension shall not include additional money awarded but
9
10 shall allow for payments to continue for the thirty-year period, or
10
11 until the net benefit for the new direct jobs for the original
11
12 contract has been fully paid out as calculated based upon the
12
13 original application.
13
14 B. In order to receive incentive payments, an establishment
14
15 shall apply to the Oklahoma Department of Commerce. The application
15
16 shall be on a form prescribed by the Department and shall contain
16
17 such information as may be required by the Department to determine
17
18 if the applicant is qualified. An establishment may apply for an
18
19 effective date for a project, which shall not be more than twenty-
19
20 four (24) months from the date the application is submitted to the
20
21 Department.
21
22 C. Except as otherwise provided by subsection D or E of this
22
23 section, in order to qualify to receive such payments, the
23
24 establishment applying shall be required to:
24
Req. No. 3277 Page 32
1 1. Be engaged in a basic industry;
1
2 2. Have an annual gross payroll for new direct jobs projected
2
3 by the Department to equal or exceed Two Million Five Hundred
3
4 Thousand Dollars ($2,500,000.00) within three (3) years of the first
4
5 complete calendar quarter following the start date; and
5
6 3. Have a number of full-time-equivalent employees subject to
6
7 the tax imposed by Section 2355 of this title and working an annual
7
8 average of thirty (30) or more hours per week in new direct jobs
8
9 located in this state equal to or in excess of eighty percent (80%)
9
10 of the total number of new direct jobs.
10
11 D. In order to qualify to receive incentive payments as
11
12 authorized by the Oklahoma Quality Jobs Program Act, an
12
13 establishment engaged in an activity described under:
13
14 1. Industry Group Nos. 3111 through 3119 of the NAICS Manual
14
15 shall be required to:
15
16 a. have an annual gross payroll for new direct jobs
16
17 projected by the Department to equal or exceed One
17
18 Million Five Hundred Thousand Dollars ($1,500,000.00)
18
19 within three (3) years of the first complete calendar
19
20 quarter following the start date and make, or which
20
21 will make within one (1) year, at least seventy-five
21
22 percent (75%) of its total sales, as determined by the
22
23 Incentive Approval Committee pursuant to the
23
24 provisions of subsection B of Section 3603 of this
24
Req. No. 3277 Page 33
1 title, to out-of-state customers or buyers, to in-
1
2 state customers or buyers if the product or service is
2
3 resold by the purchaser to an out-of-state customer or
3
4 buyer for ultimate use, or to the federal government,
4
5 unless the annual gross payroll equals or exceeds Two
5
6 Million Five Hundred Thousand Dollars ($2,500,000.00)
6
7 in which case the requirements for purchase of output
7
8 provided by this subparagraph shall not apply, and
8
9 b. have a number of full-time-equivalent employees
9
10 working an average of thirty (30) or more hours per
10
11 week in new direct jobs equal to or in excess of
11
12 eighty percent (80%) of the total number of new direct
12
13 jobs; and
13
14 2. Division (4) of subparagraph a of paragraph 1 of subsection
14
15 A of Section 3603 of this title, shall be required to:
15
16 a. have an annual gross payroll for new direct jobs
16
17 projected by the Department to equal or exceed One
17
18 Million Five Hundred Thousand Dollars ($1,500,000.00)
18
19 within three (3) years of the first complete calendar
19
20 quarter following the start date, and
20
21 b. have a number of full-time-equivalent employees
21
22 working an average of thirty (30) or more hours per
22
23 week in new direct jobs equal to or in excess of
23
24
24
Req. No. 3277 Page 34
1 eighty percent (80%) of the total number of new direct
1
2 jobs.
2
3 E. 1. An establishment which locates its principal business
3
4 activity within a site consisting of at least ten (10) acres which:
4
5 a. is a federal Superfund removal site,
5
6 b. is listed on the National Priorities List established
6
7 under Section 9605 of Title 42 of the United States
7
8 Code,
8
9 c. has been formally deferred to the state in lieu of
9
10 listing on the National Priorities List, or
10
11 d. has been determined by the Department of Environmental
11
12 Quality to be contaminated by any substance regulated
12
13 by a federal or state statute governing environmental
13
14 conditions for real property pursuant to an order of
14
15 the Department of Environmental Quality,
15
16 shall qualify for incentive payments irrespective of its actual
16
17 gross payroll or the number of full-time-equivalent employees
17
18 engaged in new direct jobs.
18
19 2. In order to qualify for the incentive payments pursuant to
19
20 this subsection, the establishment shall conduct the activity
20
21 resulting in at least fifty percent (50%) of its Oklahoma taxable
21
22 income or adjusted gross income, as determined under Section 2358 of
22
23 this title, whether from the sale of products or services or both
23
24 products and services, at the physical location which has been
24
Req. No. 3277 Page 35
1 determined not to comply with the federal or state statutes
1
2 described in this subsection with respect to environmental
2
3 conditions for real property. The establishment shall be subject to
3
4 all other requirements of the Oklahoma Quality Jobs Program Act
4
5 other than the exemptions provided by this subsection.
5
6 3. In order to qualify for the incentive payments pursuant to
6
7 this subsection, the entity shall obtain from the Department of
7
8 Environmental Quality a letter of concurrence that:
8
9 a. the site designated by the entity does meet one or
9
10 more of the requirements listed in paragraph 1 of this
10
11 subsection, and
11
12 b. the site is being or has been remediated to a level
12
13 which is consistent with the intended use of the
13
14 property.
14
15 In making its determination, the Department of Environmental
15
16 Quality may rely on existing data and information available to it,
16
17 but may also require the applying entity to provide additional data
17
18 and information, as necessary.
18
19 4. If authorized by the Department of Environmental Quality
19
20 pursuant to paragraph 3 of this subsection, the entity may utilize a
20
21 remediated portion of the property for its intended purpose prior to
21
22 remediation of the remainder of the site, and shall qualify for
22
23 incentive payments based on employment associated with the portion
23
24 of the site.
24
Req. No. 3277 Page 36
1 F. Except as otherwise provided by subsection G of this
1
2 section, for applications submitted on and after June 4, 2003, in
2
3 order to qualify to receive incentive payments as authorized by the
3
4 Oklahoma Quality Jobs Program Act, in addition to other
4
5 qualifications specified herein, an establishment shall be required
5
6 to pay new direct jobs an average annualized wage which equals or
6
7 exceeds:
7
8 1. One hundred ten percent (110%) of the average county wage as
8
9 determined by the Oklahoma Department of Commerce based on the most
9
10 recent U.S. United States Department of Commerce data for the county
10
11 in which the new direct jobs are located. For purposes of this
11
12 paragraph, health care premiums paid by the applicant for
12
13 individuals in new direct jobs shall be included in the annualized
13
14 wage; or
14
15 2. One hundred percent (100%) of the average county wage as
15
16 that percentage is determined by the Oklahoma Department of Commerce
16
17 based upon the most recent U.S. United States Department of Commerce
17
18 data for the county in which the new jobs are located. For purposes
18
19 of this paragraph, health care premiums paid by the applicant for
19
20 individuals in new direct jobs shall not be included in the
20
21 annualized wage.
21
22 Provided, for applications submitted before January 1, 2027, no
22
23 average wage requirement shall exceed Twenty-five Thousand Dollars
23
24 ($25,000.00), in any county. This maximum wage threshold shall be
24
Req. No. 3277 Page 37
1 indexed and modified from time to time based on the latest Consumer
1
2 Price Index year-to-date percent change release as of the date of
2
3 the annual average county wage data release from the Bureau of
3
4 Economic Analysis of the U.S. United States Department of Commerce.
4
5 G. 1. As used in this subsection, "opportunity zone" means one
5
6 or more census tracts in which, according to the most recent Federal
6
7 Decennial Census, at least thirty percent (30%) of the residents
7
8 have annual gross household incomes from all sources below the
8
9 poverty guidelines established by the U.S. United States Department
9
10 of Health and Human Services. An establishment which is otherwise
10
11 qualified to receive incentive payments and which locates its
11
12 principal business activity in an opportunity zone shall not be
12
13 subject to the requirements of subsection F of this section.
13
14 2. As used in this subsection:
14
15 a. "negative economic event" means:
15
16 (1) a man-made disaster or natural disaster as
16
17 defined in Section 683.3 of Title 63 of the
17
18 Oklahoma Statutes, resulting in the loss of a
18
19 significant number of jobs within a particular
19
20 county of this state, or
20
21 (2) an economic circumstance in which a significant
21
22 number of jobs within a particular county of this
22
23 state have been lost due to an establishment
23
24 changing its structure, consolidating with
24
Req. No. 3277 Page 38
1 another establishment, closing or moving all or
1
2 part of its operations out of this state, and
2
3 b. "significant number of jobs" means Local Area
3
4 Unemployment Statistics (LAUS) data, as determined by
4
5 the United States Bureau of Labor Statistics, for a
5
6 county which are equal to or in excess of five percent
6
7 (5%) of the total amount of Local Area Unemployment
7
8 Statistics (LAUS) data for that county for the
8
9 calendar year, or most recent twelve-month period in
9
10 which employment is measured, preceding the event.
10
11 An establishment which is otherwise qualified to receive
11
12 incentive payments and which locates in a county in which a negative
12
13 economic event has occurred within the eighteen-month period
13
14 preceding the start date shall not be subject to the requirements of
14
15 subsection F of this section; provided, an establishment shall not
15
16 be eligible to receive incentive payments based upon a negative
16
17 economic event with respect to jobs that are transferred from one
17
18 county of this state to another.
18
19 H. The Oklahoma Department of Commerce shall determine if the
19
20 applicant is qualified to receive incentive payments.
20
21 I. If the applicant is determined to be qualified by the
21
22 Department and is not subject to the provisions of subparagraph d of
22
23 paragraph 7 of subsection A of Section 3603 of this title, the
23
24 Department shall conduct a cost/benefit cost-benefit analysis to
24
Req. No. 3277 Page 39
1 determine the estimated net direct state benefits and the net
1
2 benefit rate applicable for a ten-year period beginning with the
2
3 first complete calendar quarter following the start date and to
3
4 estimate the amount of gross payroll for a ten-year period beginning
4
5 with the first complete calendar quarter following the start date or
5
6 for a thirty-year period for an establishment defined or classified
6
7 in the NAICS Manual under U.S. Industry No. 711211 (2007 version).
7
8 In conducting such cost/benefit cost-benefit analysis, the
8
9 Department shall consider quantitative factors, such as the
9
10 anticipated level of new tax revenues to the state along with the
10
11 added cost to the state of providing services, and such other
11
12 criteria as deemed appropriate by the Department. In no event shall
12
13 incentive payments, cumulatively, exceed the estimated net direct
13
14 state benefits, except for applicants subject to the provisions of
14
15 subparagraph d of paragraph 7 of subsection A of Section 3603 of
15
16 this title.
16
17 J. Upon approval of such an application, the Department shall
17
18 notify the Tax Commission and shall provide it with a copy of the
18
19 contract and the results of the cost/benefit cost-benefit analysis.
19
20 The Tax Commission may require the qualified establishment to submit
20
21 such additional information as may be necessary to administer the
21
22 provisions of the Oklahoma Quality Jobs Program Act. The approved
22
23 establishment shall file quarterly claims with the Tax Commission
23
24 and shall continue to file such quarterly claims during the ten-year
24
Req. No. 3277 Page 40
1 incentive period to show its continued eligibility for incentive
1
2 payments, as provided in Section 3606 of this title, or until it is
2
3 no longer qualified to receive incentive payments. The
3
4 establishment may be audited by the Tax Commission to verify such
4
5 eligibility. Once the establishment is approved, an agreement shall
5
6 be deemed to exist between the establishment and the State of
6
7 Oklahoma, requiring the continued incentive payment to be made as
7
8 long as the establishment retains its eligibility as defined in and
8
9 established pursuant to this section and Sections 3603 and 3606 of
9
10 this title and within the limitations contained in the Oklahoma
10
11 Quality Jobs Program Act, which existed at the time of such
11
12 approval. An establishment described in this subsection shall be
12
13 required to repay all incentive payments received under the Oklahoma
13
14 Quality Jobs Program Act if the establishment is determined by the
14
15 Oklahoma Tax Commission to no longer have business operations in the
15
16 state within three (3) years from the beginning of the calendar
16
17 quarter for which the first incentive payment claim is filed.
17
18 K. A municipality with a population of less than one hundred
18
19 thousand (100,000) persons in which an establishment eligible to
19
20 receive quarterly incentive payments pursuant to the provisions of
20
21 this section is located may file a claim with the Tax Commission for
21
22 up to twenty-five percent (25%) of the amount of such payment. The
22
23 amount of such claim shall not exceed amounts paid by the
23
24 municipality for direct costs of municipal infrastructure
24
Req. No. 3277 Page 41
1 improvements to provide water and sewer service to the
1
2 establishment. Such claim shall not be approved by the Tax
2
3 Commission unless the municipality and the establishment have
3
4 entered into a written agreement for such claims to be filed by the
4
5 municipality prior to submission of the application of the
5
6 establishment pursuant to the provisions of this section. If such
6
7 claim is approved, the amount of the payment to the establishment
7
8 made pursuant to the provisions of Section 3606 of this title shall
8
9 be reduced by the amount of the approved claim by the municipality
9
10 and the Tax Commission shall issue a warrant to the municipality in
10
11 the amount of the approved claim in the same manner as warrants are
11
12 issued to qualifying establishments.
12
13 L. For any contract executed by an establishment on or after
13
14 August 2, 2018, five percent (5%) of the quarterly incentive payment
14
15 amount shall be transferred by the Oklahoma Tax Commission to the
15
16 Oklahoma Quick Action Closing Fund.
16
17 SECTION 3. AMENDATORY 68 O.S. 2021, Section 3604.1, is
17
18 amended to read as follows:
18
19 Section 3604.1. A. A qualified federal contractor may receive
19
20 quarterly incentive payments for renewable ten-year periods from the
20
21 Oklahoma Tax Commission pursuant to the provisions of the Oklahoma
21
22 Quality Jobs Program Act and the provisions of this section.
22
23 B. The amount of such payments shall be equal to a net benefit
23
24 rate of not less than twenty-five hundredths one-hundredths of one
24
Req. No. 3277 Page 42
1 percent (0.25%), but not greater than two percent (2%), multiplied
1
2 by the total qualified labor hours worked by employees of the
2
3 federal contractor or employees of a qualified federal
3
4 subcontractor, or both, pursuant to a qualified federal contract for
4
5 a calendar quarter as verified by the Oklahoma Employment Security
5
6 Commission and certified by a qualified federal contractor verifier.
6
7 The net benefit rate for a qualified federal contractor shall be
7
8 scaled to annual subcontracting goals that account for both total
8
9 qualified subcontract labor hours and the ratio of qualified
9
10 subcontract labor hours to total qualified labor hours. Unless
10
11 limited by the cost/benefit cost-benefit analysis, the net benefit
11
12 rate shall:
12
13 1. Not exceed twenty-five hundredths one-hundredths of one
13
14 percent (0.25%) when annual qualified subcontract labor hours are
14
15 less than Two Hundred Thousand Dollars ($200,000.00) or when annual
15
16 qualified subcontract labor is less than one percent (1%) of the
16
17 annual total qualified labor hours claimed;
17
18 2. Not be less than five-tenths of one percent (0.5%) when
18
19 subcontract goals are met with a minimum of Two Hundred Thousand
19
20 Dollars ($200,000.00) of annual total qualified subcontractor labor
20
21 hours and these hours are a minimum of one percent (1%) of the
21
22 annual total qualified hours claimed;
22
23 3. Not be less than one percent (1%) when subcontract goals are
23
24 met with a minimum of One Million Dollars ($1,000,000.00) of annual
24
Req. No. 3277 Page 43
1 total qualified subcontractor labor hours and when these hours
1
2 represent a minimum of five percent (5%) of the annual total
2
3 qualified hours claimed;
3
4 4. Not be less than one and five-tenths percent (1.5%) when
4
5 subcontract goals are met with a minimum of Two Million Dollars
5
6 ($2,000,000.00) of annual total qualified subcontractor labor hours
6
7 and these hours are a minimum of ten percent (10%) of the annual
7
8 total qualified hours claimed; and
8
9 5. Not be less than two percent (2.0%) when subcontract goals
9
10 are met with a minimum of Four Million Dollars ($4,000,000.00) of
10
11 annual total qualified subcontractor labor hours and these hours are
11
12 a minimum of twenty percent (20%) of the annual total qualified
12
13 hours claimed.
13
14 C. In order to receive incentive payments, a qualified federal
14
15 contractor shall apply to the Oklahoma Department of Commerce within
15
16 one hundred eighty (180) days following the date of the award of a
16
17 qualified federal contract or award of a new qualified subcontract
17
18 under an existing qualified federal contract. The application shall
18
19 be on a form prescribed by the Department and shall contain such
19
20 information as may be required by the Department to determine if the
20
21 applicant is qualified. Once qualified by the Department, the
21
22 applicant shall submit qualified federal contracts to the federal
22
23 contract verifier. The federal contract verifier shall establish
23
24 with the applicant an information system(s) or contract(s) as may be
24
Req. No. 3277 Page 44
1 required to certify the total qualified labor hours, qualified labor
1
2 rates, and reimbursement through the qualified federal contract. A
2
3 qualified federal contractor may apply for an effective date for a
3
4 project, which shall not be more than twenty-four (24) months from
4
5 the date the application is submitted to the Department. No state
5
6 agency shall be required to make any payment to a qualified federal
6
7 contract verifier for any information needed by the agency to
7
8 perform any duty imposed upon it pursuant to the provisions of
8
9 Section 3601 et seq. of this title. All costs for the federal
9
10 contract verifier shall be reimbursed through value-added services
10
11 on the qualified federal contract or other mechanisms agreed to by
11
12 the federal contractor verifier and the federal contract performers.
12
13 D. In order to qualify to receive incentive payments as
13
14 authorized by the Oklahoma Quality Jobs Program Act, in addition to
14
15 other qualifications specified herein, a qualified federal
15
16 contractor shall be required to pay direct jobs an average
16
17 annualized wage which equals or exceeds:
17
18 1. One hundred ten percent (110%) of the average county wage as
18
19 determined by the Oklahoma Department of Commerce based on the most
19
20 recent U.S. United States Department of Commerce data for the county
20
21 in which the new direct jobs are located. For purposes of this
21
22 paragraph, health care premiums paid by the applicant for
22
23 individuals in new direct jobs shall be included in the annualized
23
24 wage; or
24
Req. No. 3277 Page 45
1 2. One hundred percent (100%) of the average county wage as
1
2 that percentage is determined by the Oklahoma Department of Commerce
2
3 based upon the most recent U.S. United States Department of Commerce
3
4 data for the county in which the new jobs are located. For purposes
4
5 of this paragraph, health care premiums paid by the applicant for
5
6 individuals in new direct jobs shall not be included in the
6
7 annualized wage.
7
8 Provided, for applications submitted before January 1, 2027, no
8
9 average wage requirement shall exceed Twenty-nine Thousand Four
9
10 Hundred Nine Dollars ($29,409.00), in any county. This maximum wage
10
11 threshold shall be indexed and modified from time to time based on
11
12 the latest Consumer Price Index year-to-date percent change release
12
13 as of the date of the annual average county wage data release from
13
14 the Bureau of Economic Analysis of the U.S. United States Department
14
15 of Commerce.
15
16 3. For qualified subcontractor work, the qualified federal
16
17 contractor shall have a minimum average qualified labor rate
17
18 requirement paid to the subcontractor of Thirty-one Dollars ($31.00)
18
19 per hour, in any county. This maximum wage threshold shall be
19
20 indexed and modified from time to time based on the latest Consumer
20
21 Price Index year-to-date percent change release as of the date of
21
22 the annual average county wage data release from the Bureau of
22
23 Economic Analysis of the U.S. United States Department of Commerce.
23
24
24
Req. No. 3277 Page 46
1 E. The Oklahoma Department of Commerce shall determine if the
1
2 applicant is qualified to receive incentive payments using
2
3 information supplied to the Department by the qualified federal
3
4 contractor verifier. The NAICS North American Industry
4
5 Classification System (NAICS) code or codes under which the federal
5
6 government awarded the qualified federal contract shall be used to
6
7 determine the basic industry for a qualified federal contractor.
7
8 For federal contracts awarded under NAICS codes not within the
8
9 definition of basic industry pursuant to paragraph 1 of subsection A
9
10 of Section 3603 of this title, the Oklahoma Department of Commerce,
10
11 with the federal contract verifier, may evaluate and utilize
11
12 individual statement of work items that would qualify within a basic
12
13 industry definition.
13
14 F. If the applicant is determined to be qualified by the
14
15 Department, the Department shall conduct a cost/benefit cost-benefit
15
16 analysis to determine the estimated net direct state benefits and
16
17 the net benefit rate, as provided by subsection B of this section,
17
18 applicable for a ten-year period beginning with the first complete
18
19 calendar quarter following the start date and to estimate the amount
19
20 of gross payroll and total qualified labor hours for a ten-year
20
21 period beginning with the first complete calendar quarter following
21
22 the start date. In conducting such cost/benefit cost-benefit
22
23 analysis, the Department shall consider quantitative factors, such
23
24 as the anticipated level of new tax revenues to the state along with
24
Req. No. 3277 Page 47
1 the added cost to the state of providing services, and such other
1
2 criteria as deemed appropriate by the Department. In no event shall
2
3 incentive payments, cumulatively, exceed the estimated net direct
3
4 state benefits. Using this net cost/benefit cost-benefit analysis
4
5 model, the Department may establish the renewable ten-year contract
5
6 with a qualified federal contractor at the entity level to encompass
6
7 any current or future qualified federal contracts that meet the
7
8 cost/benefit cost-benefit analysis metrics as determined by the
8
9 federal contractor verifier and confirmed by the Department.
9
10 G. Upon approval of such an application, the Department shall
10
11 notify the Tax Commission and shall provide it with a copy of the
11
12 contract that has been cosigned by the federal contractor verifier
12
13 and the results of the cost/benefit cost-benefit analysis. The Tax
13
14 Commission may require the qualified federal contractor, federal
14
15 contract verifier, and qualified subcontractors to submit such
15
16 additional information as may be necessary to administer the
16
17 provisions of the Oklahoma Quality Jobs Program Act. The approved
17
18 qualified federal contractor shall file quarterly claims with the
18
19 Tax Commission and shall continue to file such quarterly claims
19
20 during the ten-year incentive period to show its continued
20
21 eligibility for incentive payments, as provided in Section 3606 of
21
22 this title, or until it is no longer qualified to receive incentive
22
23 payments. The qualified federal contractor may be audited by the
23
24 Tax Commission to verify such eligibility. Once the qualified
24
Req. No. 3277 Page 48
1 federal contractor is approved, an agreement shall be deemed to
1
2 exist between the qualified federal contractor and the State of
2
3 Oklahoma this state, requiring the continued incentive payment to be
3
4 made as long as the qualified federal contractor retains its
4
5 eligibility as defined in and established pursuant to this section
5
6 and Sections 3603 and 3606 of this title and within the limitations
6
7 contained in the Oklahoma Quality Jobs Program Act, which existed at
7
8 the time of such approval.
8
9 H. For qualified federal contracts with periods of performance
9
10 exceeding two (2) years, if the actual annual verified gross
10
11 qualified labor hours for four (4) consecutive calendar quarters
11
12 does do not equal or exceed Two Million Five Hundred Thousand
12
13 Dollars ($2,500,000.00) within three (3) years of the start date, or
13
14 does do not equal or exceed actual annual gross qualified labor
14
15 hours of Two Million Five Hundred Thousand Dollars ($2,500,000.00)
15
16 at any other time during the ten-year period after the start date,
16
17 the incentive payments shall not be made and shall not be resumed
17
18 until such time as the actual annual qualified labor hours exceed
18
19 Two Million Five Hundred Thousand Dollars ($2,500,000.00).
19
20 I. If the average annualized wage or minimum average qualified
20
21 labor rate required by subsection H of this section is not met
21
22 during any calendar quarter, the incentive payments shall not be
22
23 made and shall not be resumed until such time as such requirements
23
24 are met.
24
Req. No. 3277 Page 49
1 J. Before approving a quarterly incentive payment for a
1
2 qualified federal contract, the federal contract verifier must first
2
3 determine through the Department that neither the qualified federal
3
4 contractor nor the subcontractor are receiving incentive payments
4
5 under the Oklahoma Quality Jobs Program Act, the Saving Quality Jobs
5
6 Act, the 21st Century Quality Jobs Incentive Act or the Former
6
7 Military Facility Development Act for the performance of the same
7
8 such services under the qualified federal contract and is not
8
9 qualified for approval of an application for incentive payments
9
10 under the Oklahoma Quality Jobs Program Act, the Saving Quality Jobs
10
11 Act, the 21st Century Quality Jobs Incentive Act or the Former
11
12 Military Facility Development Act for the performance of the same
12
13 such services under the qualified federal contract. If the
13
14 qualified federal contractor or the subcontractor are is receiving
14
15 or have has an approved application for incentive payments under the
15
16 Oklahoma Quality Jobs Program Act, the Saving Quality Jobs Act, the
16
17 21st Century Quality Jobs Incentive Act or the Former Military
17
18 Facility Development Act for the performance of the same such
18
19 services under the qualified federal contract, each may choose to
19
20 defer in part or in entirety the other incentives for the qualified
20
21 federal contractor to receive the incentives pursuant to subsection
21
22 B of this section. The federal contract verifier shall confirm any
22
23 deferrals and ensure the total for all quality jobs incentive
23
24 payments on any individual does not exceed the total net benefit to
24
Req. No. 3277 Page 50
1 the state. Should neither the federal contractor nor the
1
2 subcontractor defer in part or in entirety their incentive payments
2
3 such that the total for all Quality Jobs quality jobs incentive
3
4 payments exceeds the total net benefit to the state, the priority
4
5 for incentive payments shall go to the entity with the earliest
5
6 recognized start date indentified identified within the current
6
7 Oklahoma Department of Commerce Quality Jobs quality jobs contract.
7
8 SECTION 4. AMENDATORY 68 O.S. 2021, Section 3606, as
8
9 last amended by Section 2, Chapter 29, 1st Extraordinary Session,
9
10 O.S.L. 2023 (68 O.S. Supp. 2025, Section 3606), is amended to read
10
11 as follows:
11
12 Section 3606. A. As soon as practicable Within one (1) year
12
13 after the end of the first complete calendar quarter following the
13
14 start date, the establishment shall file a claim for the payment
14
15 with the Oklahoma Tax Commission and shall specify the actual number
15
16 and gross payroll of new direct jobs for the establishment for the
16
17 calendar quarter. The Tax Commission shall verify the actual gross
17
18 payroll for new direct jobs for the establishment for such calendar
18
19 quarter. If the Tax Commission is not able to provide such
19
20 verification utilizing all available resources, the Tax Commission
20
21 may request such additional information from the establishment as
21
22 may be necessary or may request the establishment to revise its
22
23 claim. An establishment may file for an extension of the initial
23
24 filing date with the Oklahoma Department of Commerce. Any such
24
Req. No. 3277 Page 51
1 extension shall be based solely upon an extraordinary adverse
1
2 business circumstance which prevented the establishment from hiring
2
3 the new direct jobs as projected. If an establishment fails to file
3
4 claims as required by this section, it shall forfeit the right to
4
5 receive any incentive payments after three (3) years from the start
5
6 date. If an establishment has filed at least one claim pursuant to
6
7 this section but fails to file another claim within two (2) years of
7
8 the most recent claim, the Tax Commission, after consulting with the
8
9 Oklahoma Department of Commerce, may dismiss the establishment from
9
10 the program, forfeiting the establishment's right to receive
10
11 incentive payments based on that contract.
11
12 B. 1. Except as otherwise provided in paragraph 2 of this
12
13 subsection, if the actual verified gross payroll for four (4)
13
14 consecutive calendar quarters does not equal or exceed the
14
15 applicable total required by Section 3604 of this title within three
15
16 (3) years of the start date, or does not equal or exceed the
16
17 applicable total required by Section 3604 of this title at any other
17
18 time during the ten-year period after the start date or during the
18
19 thirty-year period after the start date for establishments defined
19
20 or classified in the NAICS North American Industry Classification
20
21 System (NAICS) Manual under U.S. Industry No. 711211 (2007 version),
21
22 the incentive payments shall not be made and shall not be resumed
22
23 until such time as the actual verified gross payroll equals or
23
24 exceeds the amounts specified in Section 3604 of this title. If an
24
Req. No. 3277 Page 52
1 establishment fails to achieve the required gross payroll within
1
2 three (3) years of the start date, the establishment shall not make
2
3 a new or renewal application for incentive payments authorized
3
4 pursuant to the Oklahoma Quality Jobs Program Act for a period of
4
5 twelve (12) months from the last day of the last month of the three-
5
6 year period during which the required gross payroll amount was not
6
7 achieved.
7
8 2. Any establishment which does not meet the quarterly payroll
8
9 requirements provided pursuant to paragraph 1 of this subsection
9
10 during the time period which begins on April 1, 2020, and ends on
10
11 June 30, 2021, shall continue to receive incentive payments and
11
12 shall be exempt from the prescribed limitations.
12
13 C. If the average annualized wage required for an establishment
13
14 does not equal or exceed the amount specified in paragraph 1 or 2 of
14
15 subsection F of Section 3604 of this title during any calendar
15
16 quarter, the incentive payments shall not be made and shall not be
16
17 resumed until such time as such requirements are met.
17
18 D. In no event shall incentive payments, cumulatively, exceed
18
19 the estimated net direct state benefits, except for establishments
19
20 subject to the provisions of subparagraph d of paragraph 7 of
20
21 subsection A of Section 3603 of this title.
21
22 E. An establishment that has qualified pursuant to Section 3604
22
23 of this title may receive payments only in accordance with the
23
24 provisions of the law under which it initially applied and was
24
Req. No. 3277 Page 53
1 approved. If an establishment that is receiving incentive payments
1
2 expands, it may apply for additional incentive payments based on the
2
3 gross payroll anticipated from the expansion only, pursuant to
3
4 Section 3604 of this title. Provided, an establishment which has
4
5 suffered an extraordinary adverse business circumstance, as
5
6 certified by the Incentive Approval Committee, may be allowed to
6
7 voluntarily withdraw from the Oklahoma Quality Jobs Program, repay
7
8 to the Tax Commission the total amount of incentive payments
8
9 received pursuant to the provisions of this section, plus interest
9
10 at the rate specified in Section 727.1 of Title 12 of the Oklahoma
10
11 Statutes, and reapply to the Department for a new incentive contract
11
12 if the establishment qualifies pursuant to the provisions of the
12
13 Oklahoma Quality Jobs Program Act. Any funds received by the Tax
13
14 Commission pursuant to the provisions of this subsection shall be
14
15 apportioned in the manner that income tax revenues are apportioned.
15
16 F. An establishment that is receiving incentive payments may
16
17 not apply for additional incentive payments for any new projects
17
18 until twelve (12) quarters after receipt of the first incentive
18
19 payment, or until the establishment's actual verified gross payroll
19
20 for new direct jobs equals or exceeds Two Million Five Hundred
20
21 Thousand Dollars ($2,500,000.00) during any four consecutive-
21
22 calendar-quarter period, whichever comes first. After meeting the
22
23 requirements of this subsection, an establishment may apply for
23
24
24
Req. No. 3277 Page 54
1 additional incentive payments based upon the gross payroll
1
2 anticipated from an expansion only.
2
3 G. As soon as practicable after verification of the actual
3
4 gross payroll as required by this section and except as otherwise
4
5 provided by subsection K of Section 3604 of this title, the Tax
5
6 Commission shall issue a warrant to the establishment in the amount
6
7 of the net benefit rate multiplied by the actual gross payroll as
7
8 determined pursuant to subsection A of this section for the calendar
8
9 quarter.
9
10 SECTION 5. AMENDATORY 68 O.S. 2021, Section 3903, is
10
11 amended to read as follows:
11
12 Section 3903. As used in the Small Employer Quality Jobs
12
13 Incentive Act:
13
14 1. "Basic industry" means a basic industry as defined under the
14
15 Oklahoma Quality Jobs Program Act in divisions (1) through (9) of
15
16 subparagraph a of paragraph 1 of subsection A of Section 3603 of
16
17 this title, excluding those activities described in division (10) of
17
18 subparagraph a of paragraph 1 of subsection A of Section 3603 of
18
19 this title. Provided, for the purposes of the Small Employer
19
20 Quality Jobs Incentive Act, the determination required by
20
21 subdivision (b) of division (7) or division (8) of subparagraph a of
21
22 paragraph 1 of subsection A of Section 3603 of this title shall be
22
23 made by the Oklahoma Department of Commerce and not the Incentive
23
24 Approval Committee;
24
Req. No. 3277 Page 55
1 2. "Establishment" means any business, no matter what legal
1
2 form, including, but not limited to, a sole proprietorship,
2
3 partnership, corporation, or limited liability corporation;
3
4 3. "Estimated direct state benefits" means the tax revenues
4
5 projected by the Oklahoma Department of Commerce to accrue to the
5
6 state as a result of new direct jobs;
6
7 4. "Estimated direct state costs" means the costs projected by
7
8 the Department to accrue to the state as a result of new direct
8
9 jobs. Such costs shall include, but not be limited to:
9
10 a. the costs of education of new state resident children,
10
11 b. the costs of public health, public safety and
11
12 transportation services to be provided to new state
12
13 residents,
13
14 c. the costs of other state services to be provided to
14
15 new state residents, and
15
16 d. the costs of other state services;
16
17 5. "Estimated net direct state benefits" means the estimated
17
18 direct state benefits less the estimated direct state costs;
18
19 6. "Full-time employment" means employment of persons residing
19
20 in this state and working for thirty (30) hours per week or more in
20
21 this state, which has a minimum six-month duration during any
21
22 twelve-month period;
22
23 7. "Gross taxable payroll" means wages, as defined in Section
23
24 2385.1 of this title, for new direct jobs;
24
Req. No. 3277 Page 56
1 8. "Net benefit rate" means the estimated net direct state
1
2 benefits computed as a percentage of gross payroll; provided:
2
3 a. the net benefit rate may be variable and shall not
3
4 exceed five percent (5%) the highest rate of income
4
5 tax imposed upon the Oklahoma taxable income of
5
6 individuals pursuant to subsection D of Section 2355
6
7 of this title. Any change in the highest rate of
7
8 individual income tax imposed pursuant to the
8
9 provisions of Section 2355 of this title shall be
9
10 applicable to the computation of incentive payments to
10
11 an establishment and shall be effective for purposes
11
12 of incentive payments based on payroll paid by an
12
13 establishment on or after January 1 of any applicable
13
14 year for which the net benefit rate is modified as
14
15 required by this subparagraph, and
15
16 b. in no event shall incentive payments, cumulatively,
16
17 exceed the estimated net direct state benefits; and
17
18 9. "New direct job" means full-time employment which did not
18
19 exist in this state prior to the date of approval, by the Oklahoma
19
20 Department of Commerce, of an application made pursuant to the Small
20
21 Employer Quality Jobs Incentive Act. A job shall be deemed to exist
21
22 in this state prior to approval of an application if the activities
22
23 and functions for which the particular job exists have been ongoing
23
24 at any time within six (6) months prior to such approval.
24
Req. No. 3277 Page 57
1 SECTION 6. AMENDATORY 68 O.S. 2021, Section 3905, is
1
2 amended to read as follows:
2
3 Section 3905. A. 1. Beginning with the first complete
3
4 calendar quarter after the application of the establishment is
4
5 approved by the Oklahoma Department of Commerce, the establishment
5
6 shall begin filing quarterly reports with the Oklahoma Tax
6
7 Commission that specify the actual number and individual gross
7
8 taxable payroll of new direct jobs for the establishment and such
8
9 other information as required by the Tax Commission. In no event
9
10 shall the first claim for incentive payments be filed later than
10
11 three (3) years one (1) year from the start date designated by the
11
12 Department. The Tax Commission shall verify the actual individual
12
13 gross taxable payroll for new direct jobs. If the Tax Commission is
13
14 not able to provide such verification utilizing all available
14
15 resources, the Tax Commission may request additional information
15
16 from the establishment as may be necessary or may request the
16
17 establishment to revise its reports.
17
18 The establishment shall continue filing such reports during the
18
19 seven-year incentive period or until it is no longer qualified to
19
20 receive incentive payments. Such reports shall constitute a claim
20
21 for quarterly incentive payments by the establishment.
21
22 2. Upon receipt of a report for the initial calendar quarter of
22
23 the incentive period and for each subsequent calendar quarter
23
24
24
Req. No. 3277 Page 58
1 thereafter, the Tax Commission shall determine if the establishment
1
2 has met the following requirements:
2
3 a. created and or maintained the minimum number of new
3
4 direct jobs as specified in paragraph 3 of subsection
4
5 C of Section 3904 of this title, and
5
6 b. paid the individuals it employed in new direct jobs an
6
7 annualized wage which equaled or exceeded the
7
8 applicable percentage of the average county wage as
8
9 that percentage was determined by the Oklahoma
9
10 Department of Commerce upon approval of the
10
11 application.
11
12 3. Upon determining that an establishment has met the
12
13 requirements of paragraph 2 of this subsection for the initial
13
14 calendar quarter of the incentive period, the Tax Commission shall
14
15 issue a warrant to the establishment in an amount which shall be
15
16 equal to the net benefit rate multiplied by the amount of gross
16
17 taxable payroll of new direct jobs actually paid by the
17
18 establishment.
18
19 B. Except as provided in subsection C of this section, the
19
20 quarterly incentive payment provided for in subsection A of this
20
21 section shall be allowed in each of the twenty-seven subsequent
21
22 calendar quarters.
22
23 C. 1. An establishment which does not meet the requirements of
23
24 paragraph 2 of subsection A of this section within twelve (12)
24
Req. No. 3277 Page 59
1 months of the date of its application, or after July 1, 2011, within
1
2 twenty-four (24) months of the date of its application, shall be
2
3 ineligible to receive any incentive payments pursuant to its
3
4 application and approval.
4
5 2. An establishment which at any time during the twenty-seven
5
6 subsequent calendar quarters does not meet the requirements of
6
7 paragraph 2 of subsection A of this section shall be ineligible to
7
8 receive an incentive payment during the calendar quarter in which
8
9 such requirements are not met.
9
10 SECTION 7. AMENDATORY 68 O.S. 2021, Section 3913, is
10
11 amended to read as follows:
11
12 Section 3913. As used in the 21st Century Quality Jobs
12
13 Incentive Act:
13
14 1. "Basic industry" means:
14
15 a. a basic industry as defined under the Oklahoma Quality
15
16 Jobs Program Act in divisions (1) through (9) of
16
17 subparagraph a of paragraph 1 of subsection A of
17
18 Section 3603 of Title 68 of the Oklahoma Statutes,
18
19 excluding those activities described in division (10)
19
20 of subparagraph a of paragraph 1 of subsection A of
20
21 Section 3603 of Title 68 of the Oklahoma Statutes.
21
22 For the purposes of this act, if a determination is
22
23 required by subdivision (b) of division (7) or by
23
24 division (9) of subparagraph a of paragraph 1 of
24
Req. No. 3277 Page 60
1 subsection A of Section 3603 of Title 68 of the
1
2 Oklahoma Statutes, such determination shall be:
2
3 (1) made by the Oklahoma Department of Commerce and
3
4 not by the Incentive Approval Committee, and
4
5 (2) based on a requirement that those industries that
5
6 are required to have at least seventy-five
6
7 percent (75%) of total sales to out-of-state
7
8 customers or buyers for purposes of the Quality
8
9 Jobs Program Act shall only be required to have
9
10 fifty percent (50%) of total sales, as determined
10
11 by the Department of Commerce, to out-of-state
11
12 customers or buyers, to in-state customers or
12
13 buyers if the product or service is resold by the
13
14 purchaser to an out-of-state customer or buyer
14
15 for ultimate use, or to the federal government,
15
16 for the purposes of this act,
16
17 b. (1) those specialty hospitals (except psychiatric and
17
18 substance abuse hospitals) defined or classified
18
19 in the NAICS Manual under U.S. Industry Group No.
19
20 62231, and
20
21 (2) those performing arts companies defined or
21
22 classified in the NAICS Manual under U.S.
22
23 Industry Group No.7111, and
23
24
24
Req. No. 3277 Page 61
1 c. an establishment classified in this subparagraph which
1
2 has or will have within one (1) year sales of at least
2
3 fifty percent (50%) of its total sales, as determined
3
4 by the Department of Commerce, to out-of-state
4
5 customers or buyers, to in-state customers or buyers
5
6 if the product or service is resold by the purchaser
6
7 to an out-of-state customer or buyer for ultimate use,
7
8 or to the federal government:
8
9 (1) those electric utility activities defined or
9
10 classified in the NAICS Manual under U.S.
10
11 Industry Group No. 2211 which meet the
11
12 requirements of subdivisions a, b and d of
12
13 division 2 of subparagraph a of paragraph 1 of
13
14 Section 3603 of Title 68 of the Oklahoma
14
15 Statutes,
15
16 (2) those heavy and civil engineering construction
16
17 activities defined or classified in the NAICS
17
18 Manual under U.S. Industry Group No. 237,
18
19 (3) those motion picture and video industries defined
19
20 or classified in the NAICS Manual under U.S.
20
21 Industry Group No. 5121,
21
22 (4) those sound recording industries defined or
22
23 classified in the NAICS Manual under U.S.
23
24 Industry Group No. 5122,
24
Req. No. 3277 Page 62
1 (5) those securities, commodity contracts and other
1
2 financial investment activities defined or
2
3 classified in the NAICS Manual under U.S.
3
4 Industry Group No. 523,
4
5 (6) those insurance carriers and related activities
5
6 defined or classified in the NAICS Manual under
6
7 U.S. Industry Group No. 524,
7
8 (7) those funds, trusts and other financial vehicles
8
9 defined or classified in the NAICS Manual under
9
10 U.S. Industry Group No. 525,
10
11 (8) those professional, scientific and technical
11
12 services defined or classified in the NAICS
12
13 Manual under U.S. Industry Group Nos. 5411, 5412,
13
14 5413, 5414, 5418 and 5419, and
14
15 (9) those electronic and precision equipment repair
15
16 and maintenance activities defined or classified
16
17 in the NAICS Manual under U.S. Industry Group No.
17
18 8112;
18
19 2. "Establishment" means any business, no matter what legal
19
20 form, including, but not limited to, a sole proprietorship,
20
21 partnership, corporation, or limited liability corporation;
21
22 3. "Estimated direct state benefits" means the tax revenues
22
23 projected by the Oklahoma Department of Commerce to accrue to the
23
24 state as a result of new direct jobs;
24
Req. No. 3277 Page 63
1 4. "Estimated indirect state benefits" means the indirect new
1
2 tax revenues projected by the Oklahoma Department of Commerce to
2
3 accrue to the state, including, but not limited to, revenue
3
4 generated from ancillary support jobs directly related to the
4
5 establishment;
5
6 5. "Estimated direct state costs" means the costs projected by
6
7 the Department to accrue to the state as a result of new direct
7
8 jobs. Such costs shall include, but not be limited to:
8
9 a. the costs of education of new state resident children,
9
10 b. the costs of public health, public safety and
10
11 transportation services to be provided to new state
11
12 residents,
12
13 c. the costs of other state services to be provided to
13
14 new state residents, and
14
15 d. the costs of other state services;
15
16 6. "Estimated indirect state costs" means the costs projected
16
17 by the Department to accrue to the state as a result of new indirect
17
18 jobs. Such costs shall include, but not be limited to, costs
18
19 enumerated in subparagraphs a, b, c and d of paragraph 5 of this
19
20 subsection;
20
21 7. "Estimated net direct state benefits" means the estimated
21
22 direct state benefits less the estimated direct state costs;
22
23
23
24
24
Req. No. 3277 Page 64
1 8. "Estimated net direct and indirect state benefits" means the
1
2 estimated direct and indirect state benefits less the estimated
2
3 direct and indirect state costs;
3
4 9. "Full-time employment" means employment of persons residing
4
5 in this state and working for thirty (30) hours per week or more in
5
6 this state, which has a minimum six-month duration during any
6
7 twelve-month period;
7
8 10. "Gross taxable payroll" means wages, as defined in Section
8
9 2385.1 of Title 68 of the Oklahoma Statutes, for new direct jobs;
9
10 11. "Initial net benefit rate" means the estimated net direct
10
11 state benefits computed as a percentage of gross payroll; provided:
11
12 a. the initial net benefit rate may be variable and shall
12
13 not exceed seven percent (7%) the highest rate of
13
14 income tax imposed upon the Oklahoma taxable income of
14
15 individuals pursuant to subsection D of Section 2355
15
16 of this title. Any change in the highest rate of
16
17 individual income tax imposed pursuant to the
17
18 provisions of Section 2355 of this title shall be
18
19 applicable to the computation of incentive payments to
19
20 an establishment and shall be effective for purposes
20
21 of incentive payments based on payroll paid by an
21
22 establishment on or after January 1 of any applicable
22
23 year for which the net benefit rate is modified as
23
24 required by this subparagraph, and
24
Req. No. 3277 Page 65
1 b. in no event shall incentive payments, cumulatively,
1
2 exceed the estimated net direct state benefits; and
2
3 12. "Fulfillment net benefit rate" means the estimated net
3
4 direct and indirect state benefits computed as a percentage of gross
4
5 payroll after the completion of the first twelve (12) quarters or
5
6 until the establishment reaches ten new direct jobs, whichever
6
7 occurs first, provided:
7
8 a. the fulfillment net benefit rate may be variable and
8
9 shall not exceed ten percent (10%) the highest rate of
9
10 income tax imposed upon the Oklahoma taxable income of
10
11 individuals pursuant to subsection D of Section 2355
11
12 of this title. Any change in the highest rate of
12
13 individual income tax imposed pursuant to the
13
14 provisions of Section 2355 of this title shall be
14
15 applicable to the computation of incentive payments to
15
16 an establishment and shall be effective for purposes
16
17 of incentive payments based on payroll paid by an
17
18 establishment on or after January 1 of any applicable
18
19 year for which the previous net benefit rate is
19
20 modified as required by this subparagraph, and
20
21 b. in no event shall incentive payments, cumulatively,
21
22 exceed the estimated net direct and indirect state
22
23 benefits; and
23
24
24
Req. No. 3277 Page 66
1 13. "New direct job" means full-time employment which did not
1
2 exist in this state prior to the date of approval, by the Oklahoma
2
3 Department of Commerce, of an application made pursuant to this act.
3
4 A job shall be deemed to exist in this state prior to approval of an
4
5 application if the activities and functions for which the particular
5
6 job exists have been ongoing at anytime within six (6) months prior
6
7 to such approval.
7
8 SECTION 8. AMENDATORY 68 O.S. 2021, Section 3914, is
8
9 amended to read as follows:
9
10 Section 3914. A. Except for the payment amount required by
10
11 subsection E of this section, an establishment which meets the
11
12 qualifications specified in the 21st Century Quality Jobs Incentive
12
13 Act may receive quarterly incentive payments for a ten-year period
13
14 from the Oklahoma Tax Commission pursuant to the provisions of this
14
15 act the 21st Century Quality Jobs Incentive Act, as verified by the
15
16 Tax Commission, in an amount equal to:
16
17 1. The gross payroll multiplied by the initial net benefit rate
17
18 until such time as the establishment creates ten new direct jobs; or
18
19 2. The gross payroll multiplied by the fulfillment net benefit
19
20 rate after such time as the establishment created and maintains ten
20
21 new direct jobs.
21
22 B. In order to receive incentive payments, an establishment
22
23 shall apply to the Oklahoma Department of Commerce. The application
23
24 shall be on a form prescribed by the Department and shall contain
24
Req. No. 3277 Page 67
1 such information as may be required by the Department to determine
1
2 if the applicant is qualified. The establishment may apply for an
2
3 effective date for a project, which shall not be more than twelve
3
4 (12) months from the date the application is submitted to the
4
5 Department.
5
6 C. Before approving an application for incentive payments, the
6
7 Department must first determine that the applicant meets the
7
8 following requirements:
8
9 1. Be engaged in a basic industry as defined in the 21st
9
10 Century Quality Jobs Incentive Act;
10
11 2. Will hire at least ten full-time employees in this state
11
12 within twelve (12) quarters of the date of application;
12
13 3. Will pay the individuals it employs in new direct jobs an
13
14 average annualized wage which equals or exceeds three hundred
14
15 percent (300%) of the average county wage for the county in which
15
16 the applicant is located as that percentage is determined by the
16
17 Oklahoma Department of Commerce based on the most recent U.S. United
17
18 States Department of Commerce data. For purposes of this paragraph,
18
19 health care premiums paid by the applicant for individuals in new
19
20 direct jobs shall not be included in the annualized wage. Provided,
20
21 for applications submitted before January 1, 2027, no average wage
21
22 requirement shall exceed Ninety-four Thousand Dollars ($94,000.00)
22
23 in any county. This maximum wage threshold shall be indexed and
23
24 modified from time to time based on the latest Consumer Price Index
24
Req. No. 3277 Page 68
1 year-to-date percent change release as of the date of the annual
1
2 average county wage data release from the Bureau of Economic
2
3 Analysis of the U.S. United States Department of Commerce;
3
4 4. Has a basic health benefit plan which, as determined by the
4
5 Department, meets the elements established under divisions (1)
5
6 through (7) of subparagraph b of paragraph 1 of subsection A of
6
7 Section 3603 of this title and which will be offered to individuals
7
8 within twelve (12) months of employment in a new direct job;
8
9 5. Has not received incentive payments under the Small Employer
9
10 Quality Jobs Program Incentive Act, the Saving Quality Jobs Act or
10
11 the Former Military Facility Development Act; and
11
12 6. Is not qualified for approval of an application for
12
13 incentive payments under the Small Employer Quality Jobs Program
13
14 Incentive Act, the Saving Quality Jobs Act or the Former Military
14
15 Facility Development Act.
15
16 D. The Oklahoma Department of Commerce shall determine if an
16
17 applicant is qualified to receive the incentive payment. Upon
17
18 qualifying the applicant, the Department shall notify the Tax
18
19 Commission and shall provide it with a copy of the contract and
19
20 approval which shall provide the number of persons employed by the
20
21 applicant upon the date of approval and the maximum total incentives
21
22 which may be paid to the applicant during the ten-year period. The
22
23 Tax Commission may require the qualified establishment to submit
23
24 additional information as may be necessary to administer the
24
Req. No. 3277 Page 69
1 provisions of this act the 21st Century Quality Jobs Incentive Act.
1
2 The approved establishment shall report to the Tax Commission
2
3 quarterly to show its continued eligibility for incentive payments,
3
4 as provided in Section 3905 of this title. Establishments may be
4
5 audited by the Tax Commission to verify such eligibility. Once the
5
6 establishment is approved, an agreement shall be deemed to exist
6
7 between the establishment and the State of Oklahoma, requiring
7
8 incentive payments to be made for a ten-year period as long as the
8
9 establishment retains its eligibility and within the limitations of
9
10 this act the 21st Century Quality Jobs Incentive Act as it existed
10
11 at the time of such approval.
11
12 E. For any contract executed by an establishment on or after
12
13 the effective date of this act August 2, 2018, five percent (5%) of
13
14 the quarterly incentive payment amount shall be transferred by the
14
15 Oklahoma Tax Commission to the Oklahoma Quick Action Closing Fund.
15
16 SECTION 9. AMENDATORY 68 O.S. 2021, Section 3915, is
16
17 amended to read as follows:
17
18 Section 3915. A. 1. Beginning with the first complete
18
19 calendar quarter after the application of the establishment is
19
20 approved by the Oklahoma Department of Commerce, the establishment
20
21 shall begin filing quarterly reports with the Oklahoma Tax
21
22 Commission that specify the actual number and individual gross
22
23 taxable payroll of new direct jobs for the establishment and such
23
24 other information as required by the Tax Commission. In no event
24
Req. No. 3277 Page 70
1 shall the first claim for incentive payments be filed later than
1
2 three (3) years one (1) year from the start date designated by the
2
3 Department. The Tax Commission shall verify the actual individual
3
4 gross taxable payroll for new direct jobs. If the Tax Commission is
4
5 not able to provide such verification utilizing all available
5
6 resources, the Tax Commission may request additional information
6
7 from the establishment as may be necessary or may request the
7
8 establishment to revise its reports.
8
9 The establishment shall continue filing such reports during the
9
10 ten-year incentive period or until it is no longer qualified to
10
11 receive incentive payments. Such reports shall constitute a claim
11
12 for quarterly incentive payments by the establishment.
12
13 2. Upon receipt of a report for the initial calendar quarter of
13
14 the incentive period and for each subsequent calendar quarter
14
15 thereafter, the Tax Commission shall determine if the establishment
15
16 has met the following requirements:
16
17 a. during the initial twelve (12) quarters of the
17
18 contract or until the establishment creates ten new
18
19 direct jobs, paid the individuals it employed in new
19
20 direct jobs an average annualized wage that exceeded
20
21 the requirements of paragraph 3 of subsection C of
21
22 Section 3914 of this title, or
22
23 b. after the establishment created ten new direct jobs:
23
24
24
Req. No. 3277 Page 71
1 (1) paid the individuals it employed in new direct
1
2 jobs an average annualized wage which equaled or
2
3 exceeded the requirements of paragraph 3 of
3
4 subsection C of Section 3914 of this title, and
4
5 (2) created and/or or maintained the minimum number
5
6 of new direct jobs as specified in the 21st
6
7 Century Quality Jobs Incentive Act.
7
8 3. Upon determining that an establishment has met the
8
9 requirements of paragraph 2 of this subsection for the initial
9
10 calendar quarter of the incentive period, the Tax Commission shall
10
11 issue a warrant to the establishment in an amount which shall be
11
12 equal to either:
12
13 a. the initial net benefit rate multiplied by the amount
13
14 of gross taxable payroll of new direct jobs actually
14
15 paid by the establishment during the initial twelve
15
16 (12) quarters of the contract or until the
16
17 establishment reaches ten new direct jobs, whichever
17
18 comes first, or
18
19 b. the fulfillment net benefit rate multiplied by the
19
20 amount of gross taxable payroll of new direct jobs
20
21 actually paid by the establishment after it creates or
21
22 maintains ten new direct jobs.
22
23 B. Except as provided in subsection C of this section, the
23
24 quarterly incentive payment provided for in subsection A of this
24
Req. No. 3277 Page 72
1 section shall be allowed in each of the thirty-nine (39) subsequent
1
2 calendar quarters.
2
3 C. 1. An establishment which does not meet the requirements of
3
4 paragraph 2 of subsection A of this section within twelve (12)
4
5 quarters of the date of its application shall be ineligible to
5
6 receive any incentive payments pursuant to its application and
6
7 approval.
7
8 2. An establishment which at any time during the thirty-nine
8
9 (39) subsequent calendar quarters does not meet the requirements of
9
10 paragraph 2 of subsection A of this section shall be ineligible to
10
11 receive an incentive payment during the calendar quarter in which
11
12 such requirements are not met.
12
13 3. An establishment which has met the requirements of paragraph
13
14 2 of subsection A of this section within twelve (12) quarters of the
14
15 date of its application, but which at any time during the subsequent
15
16 twenty-eight (28) quarters fails to meet the requirements of
16
17 paragraph 2 of subsection A of this section in four (4) consecutive
17
18 quarters, shall be ineligible to receive any further incentive
18
19 payments pursuant to its application and approval.
19
20 SECTION 10. AMENDATORY 68 O.S. 2021, Section 4503, as
20
21 amended by Section 1, Chapter 127, O.S.L. 2025 (68 O.S. Supp. 2025,
21
22 Section 4503), is amended to read as follows:
22
23 Section 4503. A. As used in the Oklahoma Remote Quality Jobs
23
24 Incentive Act:
24
Req. No. 3277 Page 73
1 1. "Basic industry" means an establishment that attracts remote
1
2 workers to the state whose purpose is to increase the state's
2
3 population and who may receive rebates on the remote workers;
3
4 provided, that the remote workers meet the wage and health insurance
4
5 requirements in the state and provide evidence of such to the proxy
5
6 establishment;
6
7 2. "New direct job" shall include full-time-equivalent
7
8 employment in this state of remote workers who are employed by an
8
9 establishment other than the proxy establishment which has qualified
9
10 to receive incentive payments for attracting remote workers to the
10
11 state. Such jobs held by remote workers did not exist in this state
11
12 prior to the date of approval by the Oklahoma Department of Commerce
12
13 of the application of the proxy establishment. A job shall be
13
14 deemed to exist in this state prior to approval of an application if
14
15 the activities and functions for which the particular job exists
15
16 have been ongoing at any time within six (6) months prior to such
16
17 approval;
17
18 3. "Proxy establishment" means:
18
19 a. a public trust which:
19
20 (1) is organized and existing under Section 176 of
20
21 Title 60 of the Oklahoma Statutes for the benefit
21
22 of a geographic area which includes a city or
22
23 county or some combination thereof, and
23
24
24
Req. No. 3277 Page 74
1 (2) benefits a geographic area where new direct jobs
1
2 which meet the requirements of the Oklahoma
2
3 Remote Quality Jobs Incentive Act are created by
3
4 an establishment, other than the proxy
4
5 establishment, or
5
6 b. an establishment which facilitates the attraction of
6
7 remote workers to the State of Oklahoma;
7
8 4. "Remote worker" refers to a work flexibility arrangement
8
9 under which an employee performs the duties and responsibilities of
9
10 such employee's position, and other authorized activities, from an
10
11 approved work site other than the location from which the employee
11
12 would otherwise work, which shall not be located within the physical
12
13 boundaries of the State of Oklahoma. The remote worker should not
13
14 have lived in the State of Oklahoma in the previous twelve (12)
14
15 months;
15
16 5. "Estimated direct state benefits" means the tax revenues
16
17 projected by the Department to accrue to the state as a result of
17
18 new direct jobs;
18
19 6. "Estimated direct state costs" means the costs projected by
19
20 the Department to accrue to the state as a result of new direct
20
21 jobs. Such costs shall include, but not be limited to:
21
22 a. the costs of education of new state resident children,
22
23
23
24
24
Req. No. 3277 Page 75
1 b. the costs of public health, public safety and
1
2 transportation services to be provided to new state
2
3 residents,
3
4 c. the costs of other state services to be provided to
4
5 new state residents, and
5
6 d. the costs of other state services;
6
7 7. "Estimated net direct state benefits" means the estimated
7
8 direct state benefits less the estimated direct state costs; and
8
9 8. "Net benefit rate" means the estimated net direct state
9
10 benefits computed as a percentage of gross payroll, and shall not
10
11 exceed five percent (5%) the highest rate of income tax imposed upon
11
12 the Oklahoma taxable income of individuals pursuant to subsection D
12
13 of Section 2355 of this title. Any change in the highest rate of
13
14 individual income tax imposed pursuant to the provisions of Section
14
15 2355 of this title shall be applicable to the computation of
15
16 incentive payments to an establishment and shall be effective for
16
17 purposes of incentive payments based on payroll paid by an
17
18 establishment on or after January 1 of any applicable year for which
18
19 the net benefit rate is modified as required by this paragraph.
19
20 B. A proxy establishment shall be required to obtain from
20
21 remote workers proof of basic health benefits plans for the
21
22 individuals it includes in an application. The proxy establishment
22
23 shall submit the information to the Oklahoma Department of Commerce
23
24 and shall ensure that the basic health benefits plans provide
24
Req. No. 3277 Page 76
1 coverage where not more than fifty percent (50%) of the premium
1
2 shall be paid by the employee; however, services provided by an
2
3 Employee Assistance Plan (EAP) are not sufficient to meet this
3
4 definition.
4
5 SECTION 11. This act shall become effective November 1, 2026.
5
6
6
7 60-2-3277 QD 1/12/2026 10:26:54 PM
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Req. No. 3277 Page 77Every fact on this page links to its source, starting with the official bill record.