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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 2018 By: Thompson
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7 AS INTRODUCED
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8 An Act relating to ad valorem tax; amending 68 O.S.
8 2021, Sections 2802 and 2817, as amended by Section
9 1, Chapter 374, O.S.L. 2022 (68 O.S. Supp. 2025,
9 Section 2817), which relate to definitions and the
10 listing and assessment of taxable property; defining
10 term; prescribing valuation method for certain real
11 property; updating statutory language; and providing
11 an effective date.
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16 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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17 SECTION 1. AMENDATORY 68 O.S. 2021, Section 2802, is
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18 amended to read as follows:
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19 Section 2802. As used in Section 2801 et seq. of this title:
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20 1. "Accepted standards for mass appraisal practice" means those
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21 standards for the collection and analysis of information about
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22 taxable properties within a taxing jurisdiction permitting the
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23 accurate estimate of fair cash value for similar properties in the
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24 jurisdiction either without direct observation of such similar
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Req. No. 2353 Page 1
1 properties or without direct sales price information for such
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2 similar properties using a reliable statistical or other method to
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3 estimate the values of such properties;
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4 2. "Additional homestead exemption" means the exemption
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5 provided by Section 2890 of this title;
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6 3. "Assessor" means the county assessor and, unless the context
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7 clearly requires otherwise, deputy assessors and persons employed by
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8 the county assessor in performance of duties imposed by law;
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9 4. "Assess and value" means to establish the fair cash value
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10 and taxable fair cash value of taxable real and personal property
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11 pursuant to requirements of law;
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12 5. "Assessed valuation" or "assessed value" means the
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13 percentage of the fair cash value of personal property, or the
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14 percentage of the taxable fair cash value of real property, pursuant
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15 to the provisions of Sections 8 and 8B of Article X of the Oklahoma
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16 Constitution, either of individual items of personal property,
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17 parcels of real property or the aggregate total of such individual
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18 taxable items or parcels within a jurisdiction;
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19 6. "Assessment percentage" means the percentage applied to
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20 personal property and real property pursuant to Section 8 of Article
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21 X of the Oklahoma Constitution;
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22 7. "Assessment ratio" means the relationship between assessed
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23 value and taxable fair cash value for a county or for use categories
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1 within a county expressed as a percentage determined in the annual
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2 equalization ratio study;
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3 8. "Assessment roll" means a computerized or noncomputerized
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4 record required by law to be kept by the county assessor and
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5 containing information about property within a taxing jurisdiction;
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6 9. "Assessment year" means the year beginning January 1 of each
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7 calendar year and ending on December 31 preceding the following
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8 January 1 assessment date;
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9 10. "Circuit breaker" means the form of property tax relief
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10 provided by Sections 2904 through 2911 of this title;
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11 11. "Class of subjects" means a category of property
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12 specifically designated pursuant to provisions of the Oklahoma
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13 Constitution for purposes of ad valorem taxation;
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14 12. "Code" means the Ad Valorem Tax Code, Section 2801 et seq.
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15 of this title;
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16 13. "Coefficient of dispersion" means a statistical measure of
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17 assessment uniformity for a category of property or for all property
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18 within a taxing jurisdiction;
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19 14. "Confidence level" means a statistical procedure for
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20 determining the degree of reliability for use in reporting the
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21 assessment ratio for a taxing jurisdiction;
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22 15. "Cost approach" means a method used to establish the fair
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23 cash value of property involving an estimate of current construction
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24 cost of improvements, subtracting accrued depreciation including any
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1 loss in value that may be caused by physical deterioration,
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2 functional obsolescence or economic obsolescence and adding the
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3 value of the land.
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4 a. Physical deterioration is a cause of depreciation that
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5 is a loss in value due to ordinary wear and tear and
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6 the forces of nature.
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7 b. Functional or internal obsolescence is the loss in
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8 value of a property resulting from changes in tastes,
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9 preferences, technical innovations or market
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10 standards.
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11 c. Economic or external obsolescence is a cause of
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12 depreciation that is a loss in value as a result of
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13 impairment in utility and desirability caused by
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14 factors outside the boundaries of the property or loss
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15 of value in a property (relative, relative to the cost
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16 of replacing it with a property of equal utility),
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17 utility that stems from factors external to the
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18 property;
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19 16. "County board of equalization" means the board which, upon
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20 hearing competent evidence, has the authority to correct and adjust
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21 the assessment rolls in its respective county to conform to fair
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22 cash value and such other responsibilities as prescribed in Section
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23 2801 et seq. of this title;
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1 17. "Equalization" means the process for making adjustments to
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2 taxable property values within a county by analyzing the
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3 relationships between assessed values and fair cash values in one or
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4 more use categories within the county or between counties by
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5 analyzing the relationship between assessed value and fair cash
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6 value in each county;
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7 18. "Equalization ratio study" means the analysis of the
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8 relationships between assessed values and fair cash values in the
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9 manner provided by law;
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10 19. "Fair cash value" or "market value" means the value or
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11 price at which a willing buyer would purchase property and a willing
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12 seller would sell property if both parties are knowledgeable about
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13 the property and its uses and if neither party is under any undue
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14 pressure to buy or sell and for real property shall mean the value
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15 for the highest and best use for which such property was actually
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16 used, or was previously classified for use, during the calendar year
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17 next preceding the applicable January 1 assessment date;
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18 20. "Homestead exemption" means the reduction in the taxable
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19 value of a homestead as authorized by law;
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20 21. "Income and expense approach" means a method to estimate
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21 fair cash value of a property by determining the present value of
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22 the projected income stream;
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23 22. "List and assess" means the process by which taxable
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24 property is discovered, its description recorded for purposes of ad
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1 valorem taxation and its fair cash value and taxable fair cash value
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2 are established;
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3 23. "Mill" or "millage" means the rate of tax imposed upon
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4 taxable value. One (1) mill equals One Dollar ($1.00) of tax for
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5 each One Thousand Dollars ($1,000.00) of taxable value;
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6 24. "Multiple regression analysis" means a statistical
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7 technique for estimating unknown data on the basis of known and
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8 available data;
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9 25. "Parcel" means a contiguous area of land described in a
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10 single description by a deed or other instrument or as one of a
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11 number of lots on a plat or plan, separately owned and capable of
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12 being separately conveyed;
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13 26. "Residential rental housing" means any single tax parcel
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14 development or redevelopment that contains a building or buildings
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15 with at least sixty individual rental units that are constructed and
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16 used for multifamily housing or contains at least sixty housing
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17 structures that are constructed for rental purposes. For the
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18 purposes of this paragraph, "multifamily housing" shall mean
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19 residential buildings or complexes that contain multiple separate
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20 units or dwellings intended for occupancy by multiple families or
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21 households;
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22 27. "Sales comparison approach" means the collection,
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23 verification, and screening of sales data, stratification of sales
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1 information for purposes of comparison and use of such information
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2 to establish the fair cash value of taxable property;
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3 27. 28. "State Board of Equalization" means the Board
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4 responsible for valuation of railroad, airline and public service
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5 corporation property and the adjustment and equalization of all
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6 property values both centrally and locally assessed;
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7 28. 29. "Taxable value" means the percentage of the fair cash
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8 value of personal property or the taxable fair cash value of real
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9 property, less applicable exemptions, upon which an ad valorem tax
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10 rate is levied pursuant to the provisions of Section 8 and Section
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11 8B of Article X of the Oklahoma Constitution;
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12 29. 30. "Taxable fair cash value" means the fair cash value of
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13 locally assessed real property as capped pursuant to Section 8B of
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14 Article X of the Oklahoma Constitution;
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15 30. 31. "Use category" means a subcategory of real property,
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16 that is either agricultural use, residential use or
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17 commercial/industrial use but does not and shall not constitute a
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18 class of subjects within the meaning of the Oklahoma Constitution
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19 for purposes of ad valorem taxation;
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20 31. 32. "Use value" means the basis for establishing fair cash
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21 value of real property pursuant to the requirement of Section 8 of
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22 Article X of the Oklahoma Constitution; and
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23 32. 33. "Visual inspection program" means the program required
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24 in order to gather data about real property from physical
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1 examination of the property and improvements in order to establish
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2 the fair cash values of properties so inspected at least once each
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3 four (4) years and the fair cash values of similar properties on an
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4 annual basis.
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5 SECTION 2. AMENDATORY 68 O.S. 2021, Section 2817, as
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6 amended by Section 1, Chapter 374, O.S.L. 2022 (68 O.S. Supp. 2025,
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7 Section 2817), is amended to read as follows:
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8 Section 2817. A. All taxable personal property, except
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9 intangible personal property, personal property exempt from ad
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10 valorem taxation, or household personal property, shall be listed
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11 and assessed each year at its fair cash value, estimated at the
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12 price it would bring at a fair voluntary sale, as of January 1.
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13 The fair cash value of household personal property shall be
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14 valued at ten percent (10%) of the appraised value of the
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15 improvement to the residential real property within which such
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16 personal property is located as of January 1 each year. The
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17 assessment of household personal property as provided by this
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18 section may be altered by the taxpayer listing such property at its
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19 actual fair cash value. For purposes of establishing the value of
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20 household personal property, pursuant to the requirement of Section
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21 8 of Article X of the Oklahoma Constitution, the percentage of value
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22 prescribed by this section for the household personal property shall
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23 be presumed to constitute the fair cash value of the personal
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24 property.
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1 Stocks of goods, wares, and merchandise shall be assessed at the
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2 value of the average amount on hand during the preceding year, or
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3 the average amount on hand during the part of the preceding year the
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4 stock of goods, wares, or merchandise was at its January 1 location.
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5 Provided, persons primarily engaged in selling lumber and other
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6 building materials including cement and concrete, except for home
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7 centers classified under Industry No. 444110 of the North American
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8 Industrial Industry Classification Systems System (NAICS) Manual,
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9 shall be assessed at the average value of the inventory on hand as
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10 of January 1 of each year and the value of the inventory on hand as
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11 of December 31 of the same year.
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12 B. All taxable real property shall be assessed annually as of
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13 January 1, at its fair cash value, estimated at the price it would
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14 bring at a fair voluntary sale for:
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15 1. The highest and best use for which the property was actually
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16 used during the preceding calendar year; or
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17 2. The highest and best use for which the property was last
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18 classified for use if not actually used during the preceding
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19 calendar year.
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20 When improvements upon residential real property are divided by
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21 a taxing jurisdiction line, those improvements shall be valued and
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22 assessed in the taxing jurisdiction in which the physical majority
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23 of those improvements are located.
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1 The Ad Valorem Division of the Oklahoma Tax Commission shall be
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2 responsible for the promulgation of rules which shall be followed by
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3 each county assessor of the state, for the purposes of providing for
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4 the equitable use valuation of locally assessed real property in
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5 this state. Agricultural land and nonresidential improvements
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6 necessary or convenient for agricultural purposes shall be assessed
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7 for ad valorem taxation based upon the highest and best use for
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8 which the property was actually used, or was previously classified
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9 for use, during the calendar year next preceding January 1 on which
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10 the assessment is made.
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11 C. The use value of agricultural land shall be based on the
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12 income capitalization approach using cash rent. The rental income
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13 shall be calculated using the direct capitalization method based
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14 upon factors including, but not limited to:
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15 1. Soil types, as depicted on soil maps published by the
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16 Natural Resources Conservation Service of the United States
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17 Department of Agriculture;
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18 2. Soil productivity indices approved by the Ad Valorem
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19 Division of the Tax Commission;
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20 3. The specific agricultural purpose of the soil based on use
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21 categories approved by the Ad Valorem Division of the Tax
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22 Commission; and
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23 4. A capitalization rate to be determined annually by the Ad
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24 Valorem Division of the Tax Commission based on the sum of the
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1 average first mortgage interest rate charged by the Federal Land
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2 Bank for the immediately preceding five (5) years, weighted with the
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3 prevailing rate or rates for additional loans or equity, and the
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4 effective tax rate.
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5 The final use value will be calculated using the soil
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6 productivity indices and the agricultural use classification as
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7 defined by rules promulgated by the State Board of Equalization.
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8 This subsection shall not be construed in a manner which is
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9 inconsistent with the duties, powers, and authority of the Board as
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10 to valuation of the counties as fixed and defined by Section 21 of
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11 Article X of the Oklahoma Constitution.
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12 However, in calculating the use value of buffer strips as
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13 defined in Section 2817.2 of this title, exclusive consideration
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14 shall be based only on income from production agriculture from such
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15 buffer strips, not including federal or state subsidies, when valued
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16 as required by subsection C of Section 2817.2 of this title.
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17 D. The use value of nonresidential improvements on agricultural
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18 land shall be based on the cost approach to value estimation using
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19 currently updated cost manuals published by the Marshall and Swift
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20 Company or similar cost manuals approved by the Ad Valorem Division
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21 of the Tax Commission. The use value estimates for the
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22 nonresidential improvements shall take obsolescence and depreciation
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23 into consideration in addition to necessary adjustments for local
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24 variations in the cost of labor and materials. This section shall
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1 not be construed in a manner which is inconsistent with the duties,
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2 powers, and authority of the Board as to equalization of valuation
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3 of the counties as determined and defined by Section 21 of Article X
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4 of the Oklahoma Constitution.
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5 The use value of facilities used for poultry production shall be
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6 determined according to the following procedures:
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7 1. The Ad Valorem Division of the Tax Commission is hereby
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8 directed to develop a standard system of valuation of both real and
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9 personal property of such facilities, which shall be used by all
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10 county assessors in this state, under which valuation based on the
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11 following shall be presumed to be the fair cash value of the
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12 property:
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13 a. for real property, a ten-year depreciation schedule,
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14 at the end of which the residual value is twenty
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15 percent (20%) of the value of the facility during its
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16 first year of operation, and
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17 b. for personal property, a five-year depreciation
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18 schedule, at the end of which the residual value is
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19 zero;
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20 2. Such facilities shall be valued only in comparison to other
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21 facilities used exclusively for poultry production. Such a facility
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22 which is no longer used for poultry production shall be deemed to
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23 have no productive use;
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1 3. During the first year such a facility is placed on the tax
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2 rolls, its fair cash value shall be presumed to be the lesser of the
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3 actual purchase price or the actual documented cost of construction;
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4 and
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5 4. For the purpose of determining the valuation of
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6 nonresidential improvements used for poultry production, the
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7 provisions of this subsection shall be applicable and such
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8 improvements shall not be considered to be commercial property.
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9 E. The value of investment in property used exclusively by an
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10 oil refinery that is used wholly as a facility, device, or method
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11 for the desulphurization of gasoline or diesel fuel as defined in
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12 Section 2817.3 of this title shall not be included in the
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13 capitalization used in the determination of fair market value of
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14 such oil refinery if such property would qualify as exempt property
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15 pursuant to Section 2902 of this title, whether or not an
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16 application for such exemption is made by an otherwise qualifying
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17 manufacturing concern owning the property described by Section
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18 2817.3 of this title.
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19 F. The use value of a lot in any platted addition or a
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20 subdivision in a city, town, or county zoned for residential,
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21 commercial, industrial, or other use shall be deemed to be the fair
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22 cash value of the underlying tract of land platted, divided by the
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23 number of lots contained in the platted addition or subdivision
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24 until the lot shall have been conveyed to a bona fide purchaser or
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1 the lot with building or buildings located thereon shall have been
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2 occupied other than as a sales office by the owner thereof, or shall
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3 have been leased, whichever event shall first occur. One who
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4 purchases a lot for the purposes of constructing and selling a
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5 building on such lot shall not be deemed to be a bona fide purchaser
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6 for purposes of this section. However, if the lot is held for a
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7 period longer than two (2) years before construction, then the
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8 assessor may consider the lot to have been conveyed to a bona fide
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9 purchaser. The cost of any land or improvements to any real
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10 property required to be dedicated to public use including, but not
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11 limited to, streets, curbs, gutters, sidewalks, storm or sanitary
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12 sewers, utilities, detention or retention ponds, easements, parks,
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13 or reserves shall not be utilized by the county assessor in the
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14 valuation of any real property for assessment purposes.
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15 G. The transfer of real property without a change in its use
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16 classification shall not require a reassessment thereof based
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17 exclusively upon the sale value of the property. However, if the
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18 county assessor determines:
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19 1. That by reason of the transfer of a property there is a
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20 change in the actual use or classification of the property; or
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21 2. That by reason of the amount of the sales consideration it
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22 is obvious that the use classification prior to the transfer of the
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23 property is not commensurate with and would not justify the amount
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24 of the sales consideration of the property;,
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1 then the assessor shall, in either event, reassess the property for
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2 the new use classification for which the property is being used, or,
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3 the highest and best use classification for which the property may,
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4 by reason of the transfer, be classified for use.
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5 H. When the term "fair cash value" or the language "fair cash
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6 value, estimated at the price it would bring at a fair voluntary
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7 sale" is used in the Ad Valorem Tax Code, in connection with and in
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8 relation to the assessment of real property, it is defined to mean
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9 and shall be given the meaning ascribed and assigned to it in this
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10 section and when the term or language is used in the Code in
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11 connection with the assessment of personal property it shall be
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12 given its ordinary or literal meaning.
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13 I. Where any real property is zoned for a use by a proper
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14 zoning authority, and the use of the property has not been changed,
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15 the use and not zoning shall determine assessment. Any reassessment
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16 required shall be effective January 1 following the change in use.
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17 Taxable real property need not be listed annually with the county
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18 assessor.
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19 J. If any real property shall become taxable after January 1 of
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20 any year, the county assessor shall assess the same and place it
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21 upon the tax rolls for the next ensuing year. When any building is
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22 constructed upon land after January 1 of any year, the value of the
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23 building shall be added by the county assessor to the assessed
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24 valuation of the land upon which the building is constructed at the
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1 fair cash value thereof for the next ensuing year. However, after
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2 the building has been completed it shall be deemed to have a value
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3 for assessment purposes of the fair cash value of the materials used
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4 in such building only, until the building and the land on which the
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5 building is located shall have been conveyed to a bona fide
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6 purchaser or shall have been occupied or used for any purpose other
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7 than as a sales office by the owner thereof, or shall have been
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8 leased, whichever event shall first occur. The county assessor
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9 shall continue to assess the building based upon the fair market
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10 value of the materials used therein until the building and land upon
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11 which the building is located shall have been conveyed to a bona
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12 fide purchaser or is occupied or used for any purpose other than as
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13 a sales office by the owner thereof, or is leased, whichever event
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14 shall first occur.
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15 K. In the event improvements on land or personal property
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16 located therein or thereon are destroyed or partially destroyed, or
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17 the land itself is impaired or partially impaired by fire,
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18 lightning, storm, winds, floodwaters, overflow of streams, or other
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19 cause (all such destruction or impairments being referred to herein
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20 as "damage") during any year, the county assessor shall determine
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21 the amount of damage and shall reassess the property for that year
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22 at the fair cash value of the property, taking into account the
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23 actual loss of functional use of the property occasioned by such
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24 damage. The assessor shall make the appropriate value adjustments
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1 to the property for that tax year up to the time at which the
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2 assessor publishes the "Assessor's Report to the Excise Board" as
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3 required by subsection D of Section 2867 of this title. After such
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4 time, adjustments can be made only by the county board of tax roll
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5 corrections and only after the assessor has certified the tax roll
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6 for that year. The board secretary shall notify property owners in
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7 advance of the time and place at which the value adjustment to their
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8 property will be heard by the board. The board of tax roll
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9 corrections is authorized only to approve or reject the value
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10 adjustment submitted by the county assessor.
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11 L. All taxable personal property used in the exploration of
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12 oil, natural gas, or other minerals including drilling equipment and
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13 rigs, shall be assessed annually at the value set forth in the first
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14 Hadco International monthly bulletin published for the tax year,
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15 using the appropriate depth rating assigned to the drawworks by its
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16 manufacturer and the actual condition of the rig.
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17 M. The value of taxable tangible personal property used in
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18 commercial disposal systems of waste materials from the production
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19 of oil and gas shall not include any contract rights or leases for
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20 the use of such systems nor any value associated with the wellbore
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21 or non-recoverable down-hole material including casing.
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22 N. The valuation method for determining the fair cash value of
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23 residential rental housing, as that term is defined in Section 2802
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24 of this title, shall be based exclusively on the cost approach.
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1 SECTION 3. This act shall become effective November 1, 2026.
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Req. No. 2353 Page 18Every fact on this page links to its source, starting with the official bill record.