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1 STATE OF OKLAHOMA
1
2 1st Session of the 60th Legislature (2025)
2
3 SENATE BILL 227 By: Daniels
3
4
4
5
5
6 AS INTRODUCED
6
7 An Act relating to taxation; stating intent; amending
7 68 O.S. 2021, Section 1001.3a, as amended by Section
8 9, Chapter 346, O.S.L. 2022 (68 O.S. Supp. 2024,
8 Section 1001.3a), which relates to exemptions from
9 gross production tax; limiting exemption to certain
9 years; amending 68 O.S. 2021, Section 2355, as last
10 amended by Section 1, Chapter 27, 1st Extraordinary
10 Session, O.S.L. 2023 (68 O.S. Supp. 2024, Section
11 2355), which relates to income tax; modifying certain
11 income tax rate for certain tax years; modifying
12 certain withholding requirement for certain tax
12 years; amending 68 O.S. 2021, Section 2357.4, which
13 relates to tax credit for investments; limiting
13 credit to certain tax years; 68 O.S. 2021, Section
14 2357.43, which relates to the Oklahoma earned income
14 tax credit; limiting refundability of credit to
15 certain tax years; amending 68 O.S. 2021, Section
15 2358, as last amended by Section 155, Chapter 452,
16 O.S.L. 2024 (68 O.S. Supp. 2024, Section 2358), which
16 relates to adjustments; modifying amount of deduction
17 for qualifying gains receiving capital treatment for
17 certain tax years; modifying standard deduction
18 amount for certain tax years; amending 68 O.S. 2021,
18 Section 5011, which relates to the Sales Tax Relief
19 Act; limiting claims to certain years; updating
19 statutory references; updating statutory language;
20 clarifying statutory language; providing for
20 noncodificaton; providing an effective date; and
21 declaring an emergency.
21
22
22
23
23
24 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
24
Req. No. 974 Page 1
1 SECTION 1. NEW LAW A new section of law not to be
1
2 codified in the Oklahoma Statutes reads as follows:
2
3 It is the intent of the Legislature that the following
3
4 limitations and modifications to tax credits and deductions in this
4
5 act serve to mitigate the short-term decrease in collections caused
5
6 by reducing the burden on the taxpayers of this state.
6
7 SECTION 2. AMENDATORY 68 O.S. 2021, Section 1001.3a, as
7
8 amended by Section 9, Chapter 346, O.S.L. 2022 (68 O.S. Supp. 2024,
8
9 Section 1001.3a), is amended to read as follows:
9
10 Section 1001.3a. A. As used in this section:
10
11 1. Prior to January 1, 2015, "economically at-risk oil or gas
11
12 lease" means any oil or gas lease operated at a net loss or at a net
12
13 profit which is less than the total gross production tax remitted
13
14 for such lease during the previous calendar year;
14
15 2. On or after January 1, 2015, and before January 1, 2022,
15
16 "economically at-risk oil or gas lease" means any oil or gas lease
16
17 with one or more producing wells with an average production volume
17
18 per well of ten (10) barrels of oil or sixty (60) MCF of natural gas
18
19 per day or less operated at a net loss or at a net profit which is
19
20 less than the total gross production tax remitted for such lease
20
21 during the previous calendar year;
21
22 3. For calendar year 2022 and subsequent calendar years 2022
22
23 through 2024, "economically at-risk oil or gas lease" means any oil
23
24 or gas lease with one or more producing wells with an average
24
Req. No. 974 Page 2
1 production volume per well of ten (10) barrels of oil or sixty (60)
1
2 MCF or less of natural gas per day operated at a net loss or at a
2
3 net profit which is less than the total gross production tax
3
4 remitted for such lease during the previous calendar year, and any
4
5 oil lease operating while the gross value of the production of oil
5
6 is less than Fifty Dollars ($50.00), on an average monthly basis,
6
7 based on a per-barrel measurement of forty-two (42) U.S. gallons of
7
8 two hundred thirty-one (231) cubic inches per gallon, computed at a
8
9 temperature of sixty (60) degrees Fahrenheit or gas lease operating
9
10 while the gross value of the production of gas is less than Three
10
11 Dollars and fifty cents ($3.50), on an average monthly basis, based
11
12 on a measurement of one million (1,000,000) British thermal units
12
13 (MMBtu); and
13
14 4. "Lease" shall be defined as in Section 1001.2 of this title.
14
15 B. When certified as such pursuant to the provisions of this
15
16 section, production from an economically at-risk oil or gas lease
16
17 shall be eligible for an exemption from the gross production tax
17
18 levied pursuant to subsection B of Section 1001 of this title for
18
19 production on such lease during the previous calendar year in the
19
20 following amounts:
20
21 1. If the gross production tax rate levied pursuant to
21
22 subsection B of Section 1001 of this title was seven percent (7%),
22
23 then the exemption shall equal six-sevenths (6/7) of the gross
23
24 production tax levied; and
24
Req. No. 974 Page 3
1 2. If the gross production tax rate levied pursuant to
1
2 subsection B of Section 1001 of this title was five percent (5%),
2
3 then the exemption shall equal four-fifths (4/5) of the gross
3
4 production tax levied.
4
5 C. For all production exempt from gross production taxes
5
6 pursuant to this section, a refund of gross production taxes paid
6
7 for production in the previous calendar year in the amounts
7
8 specified in subsection B of this section, subject to the
8
9 limitations and provisions specified in subsections D and J of this
9
10 section, shall be issued to the well operator or a designee. For
10
11 production in calendar years ending on or before December 31, 2015,
11
12 the refund shall not be claimed until after July 1 of the year
12
13 following the year of production. For production in the calendar
13
14 year ending December 31, 2016, the refund shall be claimed before
14
15 July 1, 2017. For production in the calendar year 2024, the refund
15
16 shall be claimed on or before the effective date of this act. The
16
17 Oklahoma Tax Commission shall not accept or pay any claim for refund
17
18 filed after the effective date of this act.
18
19 D. For oil and natural gas produced from qualifying leases in
19
20 calendar years 2015 and 2016, the total amount of refunds authorized
20
21 in this section for each calendar year shall not exceed Twelve
21
22 Million Five Hundred Thousand Dollars ($12,500,000.00) for all
22
23 products combined. For oil and natural gas produced from qualifying
23
24 leases in calendar year 2022 and subsequent calendar years 2022
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Req. No. 974 Page 4
1 through 2024, the total amount of refunds authorized in this section
1
2 for each calendar year shall not exceed Ten Million Dollars
2
3 ($10,000,000.00) for all products combined. If the amount of claims
3
4 exceeds the limits provided in this subsection, the Tax Commission
4
5 shall determine the percentage of the refund which establishes the
5
6 proportionate share of the refund which may be claimed by any
6
7 taxpayer so that the maximum amount authorized by this subsection is
7
8 not exceeded.
8
9 E. Any operator making application for an economically at-risk
9
10 oil or gas lease status under the provisions of this section shall
10
11 submit documentation to the Tax Commission, as determined by the Tax
11
12 Commission to be appropriate and necessary.
12
13 F. For the purposes of this section, determination of the
13
14 economically at-risk oil or gas lease status shall be made by
14
15 subtracting from the gross revenue of that lease for the previous
15
16 calendar year severance taxes, if any, royalty, operating expenses
16
17 of the lease to include expendable workover and recompletion costs
17
18 for the previous calendar year, and including overhead costs up to
18
19 the maximum overhead percentage allowed by the Council of Petroleum
19
20 Accountants Societies (COPAS) guidelines. For the purposes of this
20
21 calculation, depreciation, depletion or intangible drilling costs
21
22 shall not be included as lease operating expenses.
22
23 G. The Tax Commission shall have sole authority to determine if
23
24 an oil or gas lease qualifies for certification as an economically
24
Req. No. 974 Page 5
1 at-risk oil or gas lease. The Tax Commission shall promulgate rules
1
2 governing the certification process.
2
3 H. Except as provided in subsection I of this section, gross
3
4 production tax exemptions under the provisions of this section shall
4
5 be limited to production from calendar years 2005 through 2013 and
5
6 2022 and subsequent calendar years 2022 through 2024; provided, no
6
7 claims for refunds for calendar years 2013 and before shall be paid
7
8 on or after December 31, 2015.
8
9 I. Gross production tax exemptions claimed under the provisions
9
10 of this section shall be limited to production from calendar years
10
11 2014, 2015 and 2016; provided, no claims for refunds for the
11
12 calendar years 2014 and 2015 shall be claimed or paid more than
12
13 eighteen (18) months after the first day of the fiscal year during
13
14 which the refund is first available. For production in calendar
14
15 year 2016, no claim for refund filed on or after July 1, 2017, shall
15
16 be claimed or paid.
16
17 J. Claims for refunds pursuant to the provisions of this
17
18 section for production periods ending on or before December 31,
18
19 2016, shall be paid pursuant to the provisions of this subsection.
19
20 The claims for refunds referenced herein shall be paid in equal
20
21 payments over a period of thirty-six (36) months. The first payment
21
22 shall be made after July 1, 2018, but prior to August 1, 2018. The
22
23 Tax Commission shall provide, not later than June 30, 2018, to the
23
24
24
Req. No. 974 Page 6
1 operator or designated interest owner, a schedule of rebates to be
1
2 paid out over the thirty-six-month period.
2
3 K. Claims for refunds pursuant to the provisions of this
3
4 section for production periods beginning and ending on or after
4
5 calendar year 2022 in calendar years 2022 through 2024 shall be paid
5
6 in the form of a one-time payment.
6
7 SECTION 3. AMENDATORY 68 O.S. 2021, Section 2355, as
7
8 last amended by Section 1, Chapter 27, 1st Extraordinary Session,
8
9 O.S.L. 2023 (68 O.S. Supp. 2024, Section 2355), is amended to read
9
10 as follows:
10
11 Section 2355. A. Individuals. For all taxable years beginning
11
12 after December 31, 1998, and before January 1, 2006, a tax is hereby
12
13 imposed upon the Oklahoma taxable income of every resident or
13
14 nonresident individual, which tax shall be computed at the option of
14
15 the taxpayer under one of the two following methods:
15
16 1. METHOD 1.
16
17 a. Single individuals and married individuals filing
17
18 separately not deducting federal income tax:
18
19 (1) 1/2% tax on first $1,000.00 or part thereof,
19
20 (2) 1% tax on next $1,500.00 or part thereof,
20
21 (3) 2% tax on next $1,250.00 or part thereof,
21
22 (4) 3% tax on next $1,150.00 or part thereof,
22
23 (5) 4% tax on next $1,300.00 or part thereof,
23
24 (6) 5% tax on next $1,500.00 or part thereof,
24
Req. No. 974 Page 7
1 (7) 6% tax on next $2,300.00 or part thereof, and
1
2 (8) (a) for taxable years beginning after December
2
3 31, 1998, and before January 1, 2002, 6.75%
3
4 tax on the remainder,
4
5 (b) for taxable years beginning on or after
5
6 January 1, 2002, and before January 1, 2004,
6
7 7% tax on the remainder, and
7
8 (c) for taxable years beginning on or after
8
9 January 1, 2004, 6.65% tax on the remainder.
9
10 b. Married individuals filing jointly and surviving
10
11 spouse to the extent and in the manner that a
11
12 surviving spouse is permitted to file a joint return
12
13 under the provisions of the Internal Revenue Code of
13
14 1986, as amended, and heads of households as defined
14
15 in the Internal Revenue Code of 1986, as amended, not
15
16 deducting federal income tax:
16
17 (1) 1/2% tax on first $2,000.00 or part thereof,
17
18 (2) 1% tax on next $3,000.00 or part thereof,
18
19 (3) 2% tax on next $2,500.00 or part thereof,
19
20 (4) 3% tax on next $2,300.00 or part thereof,
20
21 (5) 4% tax on next $2,400.00 or part thereof,
21
22 (6) 5% tax on next $2,800.00 or part thereof,
22
23 (7) 6% tax on next $6,000.00 or part thereof, and
23
24
24
Req. No. 974 Page 8
1 (8) (a) for taxable years beginning after December
1
2 31, 1998, and before January 1, 2002, 6.75%
2
3 tax on the remainder,
3
4 (b) for taxable years beginning on or after
4
5 January 1, 2002, and before January 1, 2004,
5
6 7% tax on the remainder, and
6
7 (c) for taxable years beginning on or after
7
8 January 1, 2004, 6.65% tax on the remainder.
8
9 2. METHOD 2.
9
10 a. Single individuals and married individuals filing
10
11 separately deducting federal income tax:
11
12 (1) 1/2% tax on first $1,000.00 or part thereof,
12
13 (2) 1% tax on next $1,500.00 or part thereof,
13
14 (3) 2% tax on next $1,250.00 or part thereof,
14
15 (4) 3% tax on next $1,150.00 or part thereof,
15
16 (5) 4% tax on next $1,200.00 or part thereof,
16
17 (6) 5% tax on next $1,400.00 or part thereof,
17
18 (7) 6% tax on next $1,500.00 or part thereof,
18
19 (8) 7% tax on next $1,500.00 or part thereof,
19
20 (9) 8% tax on next $2,000.00 or part thereof,
20
21 (10) 9% tax on next $3,500.00 or part thereof, and
21
22 (11) 10% tax on the remainder.
22
23 b. Married individuals filing jointly and surviving
23
24 spouse to the extent and in the manner that a
24
Req. No. 974 Page 9
1 surviving spouse is permitted to file a joint return
1
2 under the provisions of the Internal Revenue Code of
2
3 1986, as amended, and heads of households as defined
3
4 in the Internal Revenue Code of 1986, as amended,
4
5 deducting federal income tax:
5
6 (1) 1/2% tax on the first $2,000.00 or part thereof,
6
7 (2) 1% tax on the next $3,000.00 or part thereof,
7
8 (3) 2% tax on the next $2,500.00 or part thereof,
8
9 (4) 3% tax on the next $1,400.00 or part thereof,
9
10 (5) 4% tax on the next $1,500.00 or part thereof,
10
11 (6) 5% tax on the next $1,600.00 or part thereof,
11
12 (7) 6% tax on the next $1,250.00 or part thereof,
12
13 (8) 7% tax on the next $1,750.00 or part thereof,
13
14 (9) 8% tax on the next $3,000.00 or part thereof,
14
15 (10) 9% tax on the next $6,000.00 or part thereof, and
15
16 (11) 10% tax on the remainder.
16
17 B. Individuals. For all taxable years beginning on or after
17
18 January 1, 2008, and ending any tax year which begins after December
18
19 31, 2015, for which the determination required pursuant to Sections
19
20 4 2355.1F and 5 2355.1G of this act title is made by the State Board
20
21 of Equalization, a tax is hereby imposed upon the Oklahoma taxable
21
22 income of every resident or nonresident individual, which tax shall
22
23 be computed as follows:
23
24
24
Req. No. 974 Page 10
1 1. Single individuals and married individuals filing
1
2 separately:
2
3 (a) 1/2% tax on first $1,000.00 or part thereof,
3
4 (b) 1% tax on next $1,500.00 or part thereof,
4
5 (c) 2% tax on next $1,250.00 or part thereof,
5
6 (d) 3% tax on next $1,150.00 or part thereof,
6
7 (e) 4% tax on next $2,300.00 or part thereof,
7
8 (f) 5% tax on next $1,500.00 or part thereof,
8
9 (g) 5.50% tax on the remainder for the 2008 tax year and
9
10 any subsequent tax year unless the rate prescribed by
10
11 subparagraph (h) of this paragraph is in effect, and
11
12 (h) 5.25% tax on the remainder for the 2009 and subsequent
12
13 tax years. The decrease in the top marginal
13
14 individual income tax rate otherwise authorized by
14
15 this subparagraph shall be contingent upon the
15
16 determination required to be made by the State Board
16
17 of Equalization pursuant to Section 2355.1A of this
17
18 title.
18
19 2. Married individuals filing jointly and surviving spouse to
19
20 the extent and in the manner that a surviving spouse is permitted to
20
21 file a joint return under the provisions of the Internal Revenue
21
22 Code of 1986, as amended, and heads of households as defined in the
22
23 Internal Revenue Code of 1986, as amended:
23
24 (a) 1/2% tax on first $2,000.00 or part thereof,
24
Req. No. 974 Page 11
1 (b) 1% tax on next $3,000.00 or part thereof,
1
2 (c) 2% tax on next $2,500.00 or part thereof,
2
3 (d) 3% tax on next $2,300.00 or part thereof,
3
4 (e) 4% tax on next $2,400.00 or part thereof,
4
5 (f) 5% tax on next $2,800.00 or part thereof,
5
6 (g) 5.50% tax on the remainder for the 2008 tax year and
6
7 any subsequent tax year unless the rate prescribed by
7
8 subparagraph (h) of this paragraph is in effect, and
8
9 (h) 5.25% tax on the remainder for the 2009 and subsequent
9
10 tax years. The decrease in the top marginal
10
11 individual income tax rate otherwise authorized by
11
12 this subparagraph shall be contingent upon the
12
13 determination required to be made by the State Board
13
14 of Equalization pursuant to Section 2355.1A of this
14
15 title.
15
16 C. Individuals. For all taxable years beginning on or after
16
17 January 1, 2024 tax year 2024, a tax is hereby imposed upon the
17
18 Oklahoma taxable income of every resident or nonresident individual,
18
19 which tax shall be computed as follows:
19
20 1. Single individuals and married individuals filing
20
21 separately:
21
22 (a) 0.25% tax on first $1,000.00 or part thereof,
22
23 (b) 0.75% tax on next $1,500.00 or part thereof,
23
24 (c) 1.75% tax on next $1,250.00 or part thereof,
24
Req. No. 974 Page 12
1 (d) 2.75% tax on next $1,150.00 or part thereof,
1
2 (e) 3.75% tax on next $2,300.00 or part thereof, and
2
3 (f) 4.75% tax on the remainder.
3
4 2. Married individuals filing jointly and surviving spouse to
4
5 the extent and in the manner that a surviving spouse is permitted to
5
6 file a joint return under the provisions of the Internal Revenue
6
7 Code of 1986, as amended, and heads of households as defined in the
7
8 Internal Revenue Code of 1986, as amended:
8
9 (a) 0.25% tax on first $2,000.00 or part thereof,
9
10 (b) 0.75% tax on next $3,000.00 or part thereof,
10
11 (c) 1.75% tax on next $2,500.00 or part thereof,
11
12 (d) 2.75% tax on next $2,300.00 or part thereof,
12
13 (e) 3.75% tax on next $4,600.00 or part thereof, and
13
14 (f) 4.75% tax on the remainder.
14
15 No deduction for federal income taxes paid shall be allowed to
15
16 any taxpayer to arrive at taxable income.
16
17 D. Individuals. For tax year 2025 and subsequent tax years, a
17
18 tax is hereby imposed upon the Oklahoma taxable income of every
18
19 resident or nonresident individual, which tax shall be computed as
19
20 follows:
20
21 1. Single individuals and married individuals filing
21
22 separately:
22
23 (a) 0.0% tax on first $1,000.00 or part thereof,
23
24 (b) 0.25% tax on next $1,500.00 or part thereof,
24
Req. No. 974 Page 13
1 (c) 1.25% tax on next $1,250.00 or part thereof,
1
2 (d) 2.25% tax on next $1,150.00 or part thereof,
2
3 (e) 3.25% tax on the next $2,300.00 or part thereof, and
3
4 (f) 4.25% tax on the remainder.
4
5 2. Married individuals filing jointly and surviving spouse to
5
6 the extent and in the manner that a surviving spouse is permitted to
6
7 file a joint return under the provisions of the Internal Revenue
7
8 Code of 1986, as amended, and heads of households as defined in the
8
9 Internal Revenue Code of 1986, as amended:
9
10 (a) 0.0% tax on first $2,000.00 or part thereof,
10
11 (b) 0.25% tax on next $3,000.00 or part thereof,
11
12 (c) 1.25% tax on next $2,500.00 or part thereof,
12
13 (d) 2.25% tax on next $2,300.00 or part thereof,
13
14 (e) 3.25% tax on the next $4,600.00 or part thereof, and
14
15 (f) 4.25% on the remainder.
15
16 No deduction for federal income taxes paid shall be allowed to
16
17 any taxpayer to arrive at taxable income.
17
18 E. Nonresident aliens. In lieu of the rates set forth in
18
19 subsection A above, there shall be imposed on nonresident aliens, as
19
20 defined in the Internal Revenue Code of 1986, as amended, a tax of
20
21 eight percent (8%) instead of thirty percent (30%) as used in the
21
22 Internal Revenue Code of 1986, as amended, with respect to the
22
23 Oklahoma taxable income of such nonresident aliens as determined
23
24 under the provision of the Oklahoma Income Tax Act.
24
Req. No. 974 Page 14
1 Every payer of amounts covered by this subsection shall deduct
1
2 and withhold from such amounts paid each payee an amount equal to
2
3 eight percent (8%) thereof. Every payer required to deduct and
3
4 withhold taxes under this subsection shall for each quarterly period
4
5 on or before the last day of the month following the close of each
5
6 such quarterly period, pay over the amount so withheld as taxes to
6
7 the Oklahoma Tax Commission, and shall file a return with each such
7
8 payment. Such return shall be in such form as the Tax Commission
8
9 shall prescribe. Every payer required under this subsection to
9
10 deduct and withhold a tax from a payee shall, as to the total
10
11 amounts paid to each payee during the calendar year, furnish to such
11
12 payee, on or before January 31, of the succeeding year, a written
12
13 statement showing the name of the payer, the name of the payee and
13
14 the payee's Social Security account number, if any, the total amount
14
15 paid subject to taxation, and the total amount deducted and withheld
15
16 as tax and such other information as the Tax Commission may require.
16
17 Any payer who fails to withhold or pay to the Tax Commission any
17
18 sums herein required to be withheld or paid shall be personally and
18
19 individually liable therefor to the State of Oklahoma.
19
20 E. F. Corporations. For all taxable years beginning after
20
21 December 31, 2021, a tax is hereby imposed upon the Oklahoma taxable
21
22 income of every corporation doing business within this state or
22
23 deriving income from sources within this state in an amount equal to
23
24 four percent (4%) thereof.
24
Req. No. 974 Page 15
1 There shall be no additional Oklahoma income tax imposed on
1
2 accumulated taxable income or on undistributed personal holding
2
3 company income as those terms are defined in the Internal Revenue
3
4 Code of 1986, as amended.
4
5 F. G. Certain foreign corporations. In lieu of the tax imposed
5
6 in the first paragraph of subsection D F of this section, for all
6
7 taxable years beginning after December 31, 2021, there shall be
7
8 imposed on foreign corporations, as defined in the Internal Revenue
8
9 Code of 1986, as amended, a tax of four percent (4%) instead of
9
10 thirty percent (30%) as used in the Internal Revenue Code of 1986,
10
11 as amended, where such income is received from sources within
11
12 Oklahoma this state, in accordance with the provisions of the
12
13 Internal Revenue Code of 1986, as amended, and the Oklahoma Income
13
14 Tax Act.
14
15 Every payer of amounts covered by this subsection shall deduct
15
16 and withhold from such amounts paid each payee an amount equal to
16
17 four percent (4%) thereof. Every payer required to deduct and
17
18 withhold taxes under this subsection shall for each quarterly period
18
19 on or before the last day of the month following the close of each
19
20 such quarterly period, pay over the amount so withheld as taxes to
20
21 the Tax Commission, and shall file a return with each such payment.
21
22 Such return shall be in such form as the Tax Commission shall
22
23 prescribe. Every payer required under this subsection to deduct and
23
24 withhold a tax from a payee shall, as to the total amounts paid to
24
Req. No. 974 Page 16
1 each payee during the calendar year, furnish to such payee, on or
1
2 before January 31, of the succeeding year, a written statement
2
3 showing the name of the payer, the name of the payee and the payee's
3
4 Social Security account number, if any, the total amounts paid
4
5 subject to taxation, the total amount deducted and withheld as tax,
5
6 and such other information as the Tax Commission may require. Any
6
7 payer who fails to withhold or pay to the Tax Commission any sums
7
8 herein required to be withheld or paid shall be personally and
8
9 individually liable therefor to the State of Oklahoma.
9
10 G. H. Fiduciaries. A tax is hereby imposed upon the Oklahoma
10
11 taxable income of every trust and estate at the same rates as are
11
12 provided in subsection B or C subsections B through D of this
12
13 section for single individuals. Fiduciaries are not allowed a
13
14 deduction for any federal income tax paid.
14
15 H. I. Tax rate tables. For all taxable years beginning after
15
16 December 31, 1991, in lieu of the tax imposed by subsection A, B or
16
17 C subsections A through D of this section, as applicable there is
17
18 hereby imposed for each taxable year on the taxable income of every
18
19 individual, whose taxable income for such taxable year does not
19
20 exceed the ceiling amount, a tax determined under tables, applicable
20
21 to such taxable year which shall be prescribed by the Tax Commission
21
22 and which shall be in such form as it determines appropriate. In
22
23 the table so prescribed, the amounts of the tax shall be computed on
23
24 the basis of the rates prescribed by subsection A, B or C
24
Req. No. 974 Page 17
1 subsections A through D of this section. For purposes of this
1
2 subsection, the term "ceiling amount" means, with respect to any
2
3 taxpayer, the amount determined by the Tax Commission for the tax
3
4 rate category in which such taxpayer falls.
4
5 SECTION 4. AMENDATORY 68 O.S. 2021, Section 2357.4, is
5
6 amended to read as follows:
6
7 Section 2357.4. A. Except as otherwise provided in subsection
7
8 F of Section 3658 of this title and in subsections J and K of this
8
9 section, for taxable years beginning after December 31, 1987 tax
9
10 years 1988 through 2024, there shall be allowed a credit against the
10
11 tax imposed by Section 2355 of this title for:
11
12 1. Investment in qualified depreciable property placed in
12
13 service during those years for use in a manufacturing operation, as
13
14 defined in Section 1352 of this title, which has received a
14
15 manufacturer exemption permit pursuant to the provisions of Section
15
16 1359.2 of this title or a qualified aircraft maintenance or
16
17 manufacturing facility as defined in Section 1357 of this title in
17
18 this state or a qualified web search portal as defined in Section
18
19 1357 of this title; or
19
20 2. A net increase in the number of full-time-equivalent
20
21 employees in a manufacturing operation, as defined in Section 1352
21
22 of this title, which has received a manufacturer exemption permit
22
23 pursuant to the provisions of Section 1359.2 of this title or a
23
24 qualified aircraft maintenance or manufacturing facility defined in
24
Req. No. 974 Page 18
1 Section 1357 of this title in this state or in a qualified web
1
2 search portal as defined in Section 1357 of this title including
2
3 employees engaged in support services.
3
4 B. Except as otherwise provided in subsection F of Section 3658
4
5 of this title and in subsections J and K of this section, for
5
6 taxable years beginning after December 31, 1998 tax years 1999
6
7 through 2024, there shall be allowed a credit against the tax
7
8 imposed by Section 2355 of this title for:
8
9 1. Investment in qualified depreciable property with a total
9
10 cost equal to or greater than Forty Million Dollars ($40,000,000.00)
10
11 within three (3) years from the date of initial qualifying
11
12 expenditure and placed in service in this state during those years
12
13 for use in the manufacture of products described by any Industry
13
14 Number contained in Division D of Part I of the Standard Industrial
14
15 Classification (SIC) Manual, latest revision; or
15
16 2. A net increase in the number of full-time-equivalent
16
17 employees in this state engaged in the manufacture of any goods
17
18 identified by any Industry Number contained in Division D of Part I
18
19 of the Standard Industrial Classification (SIC) Manual, latest
19
20 revision, if the total cost of qualified depreciable property placed
20
21 in service by the business entity within the state equals or exceeds
21
22 Forty Million Dollars ($40,000,000.00) within three (3) years from
22
23 the date of initial qualifying expenditure.
23
24
24
Req. No. 974 Page 19
1 C. The business entity may claim the credit authorized by
1
2 subsection B of this section for expenditures incurred or for a net
2
3 increase in the number of full-time-equivalent employees after the
3
4 business entity provides proof satisfactory to the Oklahoma Tax
4
5 Commission that the conditions imposed pursuant to paragraph 1 or
5
6 paragraph 2 of subsection B of this section have been satisfied.
6
7 D. If a business entity fails to expend the amount required by
7
8 paragraph 1 or paragraph 2 of subsection B of this section within
8
9 the time required, the business entity may not claim the credit
9
10 authorized by subsection B of this section but shall be allowed to
10
11 claim a credit pursuant to subsection A of this section if the
11
12 requirements of subsection A of this section are met with respect to
12
13 the investment in qualified depreciable property or net increase in
13
14 the number of full-time-equivalent employees.
14
15 E. The credit provided for in subsection A of this section, if
15
16 based upon investment in qualified depreciable property, shall not
16
17 be allowed unless the investment in qualified depreciable property
17
18 is at least Fifty Thousand Dollars ($50,000.00). The credit
18
19 provided for in subsection A or B of this section shall not be
19
20 allowed if the applicable investment is the direct cause of a
20
21 decrease in the number of full-time-equivalent employees. Qualified
21
22 property shall be limited to machinery, fixtures, equipment,
22
23 buildings or substantial improvements thereto, placed in service in
23
24 this state during the taxable year. The taxable years for which the
24
Req. No. 974 Page 20
1 credit may be allowed if based upon investment in qualified
1
2 depreciable property shall be measured from the year in which the
2
3 qualified property is placed in service. If the credit provided for
3
4 in subsection A or B of this section is calculated on the basis of
4
5 the cost of the qualified property, the credit shall be allowed in
5
6 each of the four (4) subsequent years. If the qualified property on
6
7 which a credit has previously been allowed is acquired from a
7
8 related party, the date such property is placed in service by the
8
9 transferor shall be considered to be the date such property is
9
10 placed in service by the transferee, for purposes of determining the
10
11 aggregate number of years for which credit may be allowed.
11
12 F. The credit provided for in subsection A or B of this
12
13 section, if based upon an increase in the number of full-time-
13
14 equivalent employees, shall be allowed in each of the four (4)
14
15 subsequent years only if the level of new employees is maintained in
15
16 the subsequent year. In calculating the credit by the number of new
16
17 employees, only those employees whose paid wages or salary were at
17
18 least Seven Thousand Dollars ($7,000.00) during each year the credit
18
19 is claimed shall be included in the calculation. Provided, that the
19
20 first year a credit is claimed for a new employee, such employee may
20
21 be included in the calculation notwithstanding paid wages of less
21
22 than Seven Thousand Dollars ($7,000.00) if the employee was hired in
22
23 the last three quarters of the tax year, has wages or salary which
23
24 will result in annual paid wages in excess of Seven Thousand Dollars
24
Req. No. 974 Page 21
1 ($7,000.00) and the taxpayer submits an affidavit stating that the
1
2 employee's position will be retained in the following tax year and
2
3 will result in the payment of wages in excess of Seven Thousand
3
4 Dollars ($7,000.00). The number of new employees shall be
4
5 determined by comparing the monthly average number of full-time
5
6 employees subject to Oklahoma income tax withholding for the final
6
7 quarter of the taxable year with the corresponding period of the
7
8 prior taxable year, as substantiated by such reports as may be
8
9 required by the Tax Commission.
9
10 G. The credit allowed by subsection A of this section shall be
10
11 the greater amount of either:
11
12 1. One percent (1%) of the cost of the qualified property in
12
13 the year the property is placed in service; or
13
14 2. Five Hundred Dollars ($500.00) for each new employee. No
14
15 credit shall be allowed in any taxable year for a net increase in
15
16 the number of full-time-equivalent employees if such increase is a
16
17 result of an investment in qualified depreciable property for which
17
18 an income tax credit has been allowed as authorized by this section.
18
19 H. The credit allowed by subsection B of this section shall be
19
20 the greater amount of either:
20
21 1. Two percent (2%) of the cost of the qualified property in
21
22 the year the property is placed in service; or
22
23 2. One Thousand Dollars ($1,000.00) for each new employee.
23
24
24
Req. No. 974 Page 22
1 No credit shall be allowed in any taxable year for a net
1
2 increase in the number of full-time-equivalent employees if such
2
3 increase is a result of an investment in qualified depreciable
3
4 property for which an income tax credit has been allowed as
4
5 authorized by this section.
5
6 I. Except as provided by subsection G of Section 3658 of this
6
7 title, any credits allowed but not used in any taxable year may be
7
8 carried over in order as follows:
8
9 1. To each of the four (4) years following the year of
9
10 qualification;
10
11 2. To the extent not used in those years in order to each of
11
12 the fifteen (15) years following the initial five-year period;
12
13 3. If a C corporation that otherwise qualified for the credits
13
14 under subsection A of this section subsequently changes its
14
15 operating status to that of a pass-through entity which is being
15
16 treated as the same entity for federal tax purposes, the credits
16
17 will continue to be available as if the pass-through entity had
17
18 originally qualified for the credits subject to the limitations of
18
19 this section;
19
20 4. To the extent not used in paragraphs 1 and 2 of this
20
21 subsection, such credits from qualified depreciable property placed
21
22 in service on or after January 1, 2000, may be utilized in any
22
23 subsequent tax years after the initial twenty-year period; and
23
24
24
Req. No. 974 Page 23
1 5. Provided, for tax years beginning on or after January 1,
1
2 2016, and ending on or before December 31, 2018, the amount of
2
3 credits available as an offset in a taxable year shall be limited to
3
4 the percentage calculated by the Tax Commission pursuant to the
4
5 provisions of subsection L of this section.
5
6 J. No credit otherwise authorized by the provisions of this
6
7 section may be claimed for any event, transaction, investment,
7
8 expenditure or other act occurring on or after July 1, 2010, for
8
9 which the credit would otherwise be allowable until the provisions
9
10 of this subsection shall cease to be operative on July 1, 2012.
10
11 Beginning July 1, 2012, the credit authorized by this section may be
11
12 claimed for any event, transaction, investment, expenditure or other
12
13 act occurring on or after July 1, 2010, according to the provisions
13
14 of this section; provided, credits accrued during the period from
14
15 July 1, 2010, through June 30, 2012, shall be limited to a period of
15
16 two (2) taxable years. The credit shall be limited in each taxable
16
17 year to fifty percent (50%) of the total amount of the accrued
17
18 credit. Any tax credits which accrue during the period of July 1,
18
19 2010, through June 30, 2012, may not be claimed for any period prior
19
20 to the taxable year beginning January 1, 2012. No credits which
20
21 accrue during the period of July 1, 2010, through June 30, 2012, may
21
22 be used to file an amended tax return for any taxable year prior to
22
23 the taxable year beginning January 1, 2012.
23
24
24
Req. No. 974 Page 24
1 K. Beginning January 1, 2017, except with respect to tax
1
2 credits allowed from investment or job creation occurring prior to
2
3 January 1, 2017, the credits authorized by this section shall not be
3
4 allowed for investment or job creation in electric power generation
4
5 by means of wind as described by the North American Industry
5
6 Classification System, No. 221119 221115.
6
7 L. For tax years beginning on or after January 1, 2016, and
7
8 ending on or before December 31, 2018, the total amount of credits
8
9 authorized by this section used to offset tax shall be adjusted
9
10 annually to limit the annual amount of credits to Twenty-five
10
11 Million Dollars ($25,000,000.00). The Tax Commission shall annually
11
12 calculate and publish a percentage by which the credits authorized
12
13 by this section shall be reduced so the total amount of credits used
13
14 to offset tax does not exceed Twenty-five Million Dollars
14
15 ($25,000,000.00) per year. The formula to be used for the
15
16 percentage adjustment shall be Twenty-five Million Dollars
16
17 ($25,000,000.00) divided by the credits used to offset tax in the
17
18 second preceding year.
18
19 M. Pursuant to subsection L of this section, in the event the
19
20 total tax credits authorized by this section exceed Twenty-five
20
21 Million Dollars ($25,000,000.00) in any calendar year, the Tax
21
22 Commission shall permit any excess over Twenty-five Million Dollars
22
23 ($25,000,000.00) but shall factor such excess into the percentage
23
24 adjustment formula for subsequent years.
24
Req. No. 974 Page 25
1 SECTION 5. AMENDATORY 68 O.S. 2021, Section 2357.43, is
1
2 amended to read as follows:
2
3 Section 2357.43. For tax years beginning on or after January 1,
3
4 2022, there shall be allowed to a resident individual or a part-year
4
5 resident individual as a credit against the tax imposed by Section
5
6 2355 of this title five percent (5%) of the earned income tax credit
6
7 allowed under Section 32 of the Internal Revenue Code of the United
7
8 States 1986, as amended, 26 U.S.C., Section 32, which for the
8
9 taxable year beginning January 1, 2022, and the taxable year
9
10 beginning each January 1 thereafter shall be computed using the same
10
11 requirements, other than the five percent (5%) amount to compute the
11
12 credit as prescribed by this section which shall remain constant, in
12
13 effect for computation of the earned income tax credit for federal
13
14 income tax purposes for the 2020 income tax year. However, this
14
15 credit shall not be paid in advance pursuant to the provisions of
15
16 Section 3507 of the Internal Revenue Code of 1986, as amended. For
16
17 tax years which begin on or after January 1, 2022 2022 through 2024,
17
18 if the credit exceeds the tax imposed by Section 2355 of this title,
18
19 the excess amount shall be refunded to the taxpayer. For tax year
19
20 2025 and subsequent tax years, the credit allowed pursuant to this
20
21 section shall not be used to reduce the income tax liability of the
21
22 taxpayer to less than zero (0). The maximum earned income tax
22
23 credit allowable on the Oklahoma income tax return shall be prorated
23
24
24
Req. No. 974 Page 26
1 on the ratio that Oklahoma adjusted gross income bears to the
1
2 federal adjusted gross income.
2
3 SECTION 6. AMENDATORY 68 O.S. 2021, Section 2358, as
3
4 last amended by Section 155, Chapter 452, O.S.L. 2024 (68 O.S. Supp.
4
5 2024, Section 2358), is amended to read as follows:
5
6 Section 2358. For all tax years beginning after December 31,
6
7 1981, taxable income and adjusted gross income shall be adjusted to
7
8 arrive at Oklahoma taxable income and Oklahoma adjusted gross income
8
9 as required by this section.
9
10 A. The taxable income of any taxpayer shall be adjusted to
10
11 arrive at Oklahoma taxable income for corporations and Oklahoma
11
12 adjusted gross income for individuals, as follows:
12
13 1. There shall be added interest income on obligations of any
13
14 state or political subdivision thereto which is not otherwise
14
15 exempted pursuant to other laws of this state, to the extent that
15
16 such interest is not included in taxable income and adjusted gross
16
17 income.
17
18 2. There shall be deducted amounts included in such income that
18
19 the state is prohibited from taxing because of the provisions of the
19
20 Federal United States Constitution, the State Oklahoma Constitution,
20
21 federal laws or laws of Oklahoma.
21
22 3. The amount of any federal net operating loss deduction shall
22
23 be adjusted as follows:
23
24
24
Req. No. 974 Page 27
1 a. For carryovers and carrybacks to taxable years
1
2 beginning before January 1, 1981, the amount of any
2
3 net operating loss deduction allowed to a taxpayer for
3
4 federal income tax purposes shall be reduced to an
4
5 amount which is the same portion thereof as the loss
5
6 from sources within this state, as determined pursuant
6
7 to this section and Section 2362 of this title, for
7
8 the taxable year in which such loss is sustained is of
8
9 the total loss for such year;
9
10 b. For carryovers and carrybacks to taxable years
10
11 beginning after December 31, 1980, the amount of any
11
12 net operating loss deduction allowed for the taxable
12
13 year shall be an amount equal to the aggregate of the
13
14 Oklahoma net operating loss carryovers and carrybacks
14
15 to such year. Oklahoma net operating losses shall be
15
16 separately determined by reference to Section 172 of
16
17 the Internal Revenue Code of 1986, as amended, 26
17
18 U.S.C., Section 172, as modified by the Oklahoma
18
19 Income Tax Act, Section 2351 et seq. of this title,
19
20 and shall be allowed without regard to the existence
20
21 of a federal net operating loss. For tax years
21
22 beginning after December 31, 2000, and ending before
22
23 January 1, 2008, the years to which such losses may be
23
24 carried shall be determined solely by reference to
24
Req. No. 974 Page 28
1 Section 172 of the Internal Revenue Code of 1986, as
1
2 amended, 26 U.S.C., Section 172, with the exception
2
3 that the terms "net operating loss" and "taxable
3
4 income" shall be replaced with "Oklahoma net operating
4
5 loss" and "Oklahoma taxable income". For tax years
5
6 beginning after December 31, 2007, and ending before
6
7 January 1, 2009, years to which such losses may be
7
8 carried back shall be limited to two (2) years. For
8
9 tax years beginning after December 31, 2008, the years
9
10 to which such losses may be carried back shall be
10
11 determined solely by reference to Section 172 of the
11
12 Internal Revenue Code of 1986, as amended, 26 U.S.C.,
12
13 Section 172, with the exception that the terms "net
13
14 operating loss" and "taxable income" shall be replaced
14
15 with "Oklahoma net operating loss" and "Oklahoma
15
16 taxable income".
16
17 4. Items of the following nature shall be allocated as
17
18 indicated. Allowable deductions attributable to items separately
18
19 allocable in subparagraphs a, b and c of this paragraph, whether or
19
20 not such items of income were actually received, shall be allocated
20
21 on the same basis as those items:
21
22 a. Income from real and tangible personal property, such
22
23 as rents, oil and mining production or royalties, and
23
24 gains or losses from sales of such property, shall be
24
Req. No. 974 Page 29
1 allocated in accordance with the situs of such
1
2 property;
2
3 b. Income from intangible personal property, such as
3
4 interest, dividends, patent or copyright royalties,
4
5 and gains or losses from sales of such property, shall
5
6 be allocated in accordance with the domiciliary situs
6
7 of the taxpayer, except that:
7
8 (1) where such property has acquired a nonunitary
8
9 business or commercial situs apart from the
9
10 domicile of the taxpayer such income shall be
10
11 allocated in accordance with such business or
11
12 commercial situs; interest income from
12
13 investments held to generate working capital for
13
14 a unitary business enterprise shall be included
14
15 in apportionable income; a resident trust or
15
16 resident estate shall be treated as having a
16
17 separate commercial or business situs insofar as
17
18 undistributed income is concerned, but shall not
18
19 be treated as having a separate commercial or
19
20 business situs insofar as distributed income is
20
21 concerned,
21
22 (2) for taxable years beginning after December 31,
22
23 2003, capital or ordinary gains or losses from
23
24 the sale of an ownership interest in a publicly
24
Req. No. 974 Page 30
1 traded partnership, as defined by Section 7704(b)
1 of the Internal Revenue Code of 1986, as amended,
2 shall be allocated to this state in the ratio of
2 the original cost of such partnership's tangible
3 property in this state to the original cost of
3 such partnership's tangible property everywhere,
4 as determined at the time of the sale; if more
4 than fifty percent (50%) of the value of the
5 partnership's assets consists of intangible
5 assets, capital or ordinary gains or losses from
6 the sale of an ownership interest in the
6 partnership shall be allocated to this state in
7 accordance with the sales factor of the
7 partnership for its first full tax period
8 immediately preceding its tax period during which
8 the ownership interest in the partnership was
9 sold; the provisions of this division shall only
9 apply if the capital or ordinary gains or losses
10 from the sale of an ownership interest in a
10 partnership do not constitute qualifying gain
11 receiving capital treatment as defined in
11 subparagraph a of paragraph 2 of subsection F of
12 this section,
12
13 Page 31
13
14
14
15
15
16
16
17
17
18
18
19
19
20
20
21
21
22
22
23
23
24
24
Req. No. 974
1 (3) income from such property which is required to be
1
2 allocated pursuant to the provisions of paragraph
2
3 5 of this subsection shall be allocated as herein
3
4 provided;
4
5 c. Net income or loss from a business activity which is
5
6 not a part of business carried on within or without
6
7 the state of a unitary character shall be separately
7
8 allocated to the state in which such activity is
8
9 conducted;
9
10 d. In the case of a manufacturing or processing
10
11 enterprise the business of which in Oklahoma this
11
12 state consists solely of marketing its products by:
12
13 (1) sales having a situs without this state, shipped
13
14 directly to a point from without the state to a
14
15 purchaser within the state, commonly known as
15
16 interstate sales,
16
17 (2) sales of the product stored in public warehouses
17
18 within the state pursuant to "in transit"
18
19 tariffs, as prescribed and allowed by the
19
20 Interstate Commerce Commission, to a purchaser
20
21 within the state,
21
22 (3) sales of the product stored in public warehouses
22
23 within the state where the shipment to such
23
24 warehouses is not covered by "in transit"
24
Req. No. 974 Page 32
1 tariffs, as prescribed and allowed by the
1
2 Interstate Commerce Commission, to a purchaser
2
3 within or without the state,
3
4 the Oklahoma net income shall, at the option of the
4
5 taxpayer, be that portion of the total net income of
5
6 the taxpayer for federal income tax purposes derived
6
7 from the manufacture and/or processing and sales
7
8 everywhere as determined by the ratio of the sales
8
9 defined in this section made to the purchaser within
9
10 the state to the total sales everywhere. The term
10
11 "public warehouse" as used in this subparagraph means
11
12 a licensed public warehouse, the principal business of
12
13 which is warehousing merchandise for the public;
13
14 e. In the case of insurance companies, Oklahoma taxable
14
15 income shall be taxable income of the taxpayer for
15
16 federal tax purposes, as adjusted for the adjustments
16
17 provided pursuant to the provisions of paragraphs 1
17
18 and 2 of this subsection, apportioned as follows:
18
19 (1) except as otherwise provided by division (2) of
19
20 this subparagraph, taxable income of an insurance
20
21 company for a taxable year shall be apportioned
21
22 to this state by multiplying such income by a
22
23 fraction, the numerator of which is the direct
23
24 premiums written for insurance on property or
24
Req. No. 974 Page 33
1 risks in this state, and the denominator of which
1
2 is the direct premiums written for insurance on
2
3 property or risks everywhere. For purposes of
3
4 this subsection, the term "direct premiums
4
5 written" means the total amount of direct
5
6 premiums written, assessments and annuity
6
7 considerations as reported for the taxable year
7
8 on the annual statement filed by the company with
8
9 the Insurance Commissioner in the form approved
9
10 by the National Association of Insurance
10
11 Commissioners, or such other form as may be
11
12 prescribed in lieu thereof,
12
13 (2) if the principal source of premiums written by an
13
14 insurance company consists of premiums for
14
15 reinsurance accepted by it, the taxable income of
15
16 such company shall be apportioned to this state
16
17 by multiplying such income by a fraction, the
17
18 numerator of which is the sum of (a) direct
18
19 premiums written for insurance on property or
19
20 risks in this state, plus (b) premiums written
20
21 for reinsurance accepted in respect of property
21
22 or risks in this state, and the denominator of
22
23 which is the sum of (c) direct premiums written
23
24 for insurance on property or risks everywhere,
24
Req. No. 974 Page 34
1 plus (d) premiums written for reinsurance
1
2 accepted in respect of property or risks
2
3 everywhere. For purposes of this paragraph,
3
4 premiums written for reinsurance accepted in
4
5 respect of property or risks in this state,
5
6 whether or not otherwise determinable, may at the
6
7 election of the company be determined on the
7
8 basis of the proportion which premiums written
8
9 for insurance accepted from companies
9
10 commercially domiciled in Oklahoma this state
10
11 bears to premiums written for reinsurance
11
12 accepted from all sources, or alternatively in
12
13 the proportion which the sum of the direct
13
14 premiums written for insurance on property or
14
15 risks in this state by each ceding company from
15
16 which reinsurance is accepted bears to the sum of
16
17 the total direct premiums written by each such
17
18 ceding company for the taxable year.
18
19 5. The net income or loss remaining after the separate
19
20 allocation in paragraph 4 of this subsection, being that which is
20
21 derived from a unitary business enterprise, shall be apportioned to
21
22 this state on the basis of the arithmetical average of three factors
22
23 consisting of property, payroll and sales or gross revenue
23
24 enumerated as subparagraphs a, b and c of this paragraph. Net
24
Req. No. 974 Page 35
1 income or loss as used in this paragraph includes that derived from
1
2 patent or copyright royalties, purchase discounts, and interest on
2
3 accounts receivable relating to or arising from a business activity,
3
4 the income from which is apportioned pursuant to this subsection,
4
5 including the sale or other disposition of such property and any
5
6 other property used in the unitary enterprise. Deductions used in
6
7 computing such net income or loss shall not include taxes based on
7
8 or measured by income. Provided, for corporations whose property
8
9 for purposes of the tax imposed by Section 2355 of this title has an
9
10 initial investment cost equaling or exceeding Two Hundred Million
10
11 Dollars ($200,000,000.00) and such investment is made on or after
11
12 July 1, 1997, or for corporations which expand their property or
12
13 facilities in this state and such expansion has an investment cost
13
14 equaling or exceeding Two Hundred Million Dollars ($200,000,000.00)
14
15 over a period not to exceed three (3) years, and such expansion is
15
16 commenced on or after January 1, 2000, the three factors shall be
16
17 apportioned with property and payroll, each comprising twenty-five
17
18 percent (25%) of the apportionment factor and sales comprising fifty
18
19 percent (50%) of the apportionment factor. The apportionment
19
20 factors shall be computed as follows:
20
21 a. The property factor is a fraction, the numerator of
21
22 which is the average value of the taxpayer's real and
22
23 tangible personal property owned or rented and used in
23
24 this state during the tax period and the denominator
24
Req. No. 974 Page 36
1 of which is the average value of all the taxpayer's
1
2 real and tangible personal property everywhere owned
2
3 or rented and used during the tax period.
3
4 (1) Property, the income from which is separately
4
5 allocated in paragraph 4 of this subsection,
5
6 shall not be included in determining this
6
7 fraction. The numerator of the fraction shall
7
8 include a portion of the investment in
8
9 transportation and other equipment having no
9
10 fixed situs, such as rolling stock, buses, trucks
10
11 and trailers, including machinery and equipment
11
12 carried thereon, airplanes, salespersons'
12
13 automobiles and other similar equipment, in the
13
14 proportion that miles traveled in Oklahoma this
14
15 state by such equipment bears to total miles
15
16 traveled,
16
17 (2) Property owned by the taxpayer is valued at its
17
18 original cost. Property rented by the taxpayer
18
19 is valued at eight times the net annual rental
19
20 rate. Net annual rental rate is the annual
20
21 rental rate paid by the taxpayer, less any annual
21
22 rental rate received by the taxpayer from
22
23 subrentals,
23
24
24
Req. No. 974 Page 37
1 (3) The average value of property shall be determined
1
2 by averaging the values at the beginning and
2
3 ending of the tax period but the Oklahoma Tax
3
4 Commission may require the averaging of monthly
4
5 values during the tax period if reasonably
5
6 required to reflect properly the average value of
6
7 the taxpayer's property;
7
8 b. The payroll factor is a fraction, the numerator of
8
9 which is the total compensation for services rendered
9
10 in the state during the tax period, and the
10
11 denominator of which is the total compensation for
11
12 services rendered everywhere during the tax period.
12
13 "Compensation", as used in this subsection, means
13
14 those paid-for services to the extent related to the
14
15 unitary business but does not include officers'
15
16 salaries, wages and other compensation.
16
17 (1) In the case of a transportation enterprise, the
17
18 numerator of the fraction shall include a portion
18
19 of such expenditure in connection with employees
19
20 operating equipment over a fixed route, such as
20
21 railroad employees, airline pilots, or bus
21
22 drivers, in this state only a part of the time,
22
23 in the proportion that mileage traveled in
23
24
24
Req. No. 974 Page 38
1 Oklahoma this state bears to total mileage
1
2 traveled by such employees,
2
3 (2) In any case the numerator of the fraction shall
3
4 include a portion of such expenditures in
4
5 connection with itinerant employees, such as
5
6 traveling salespersons, in this state only a part
6
7 of the time, in the proportion that time spent in
7
8 Oklahoma this state bears to total time spent in
8
9 furtherance of the enterprise by such employees;
9
10 c. The sales factor is a fraction, the numerator of which
10
11 is the total sales or gross revenue of the taxpayer in
11
12 this state during the tax period, and the denominator
12
13 of which is the total sales or gross revenue of the
13
14 taxpayer everywhere during the tax period. "Sales",
14
15 as used in this subsection, does not include sales or
15
16 gross revenue which are separately allocated in
16
17 paragraph 4 of this subsection.
17
18 (1) Sales of tangible personal property have a situs
18
19 in this state if the property is delivered or
19
20 shipped to a purchaser other than the United
20
21 States government, within this state regardless
21
22 of the FOB Freight on Board (FOB) point or other
22
23 conditions of the sale; or the property is
23
24 shipped from an office, store, warehouse, factory
24
Req. No. 974 Page 39
1 or other place of storage in this state and (a)
1
2 the purchaser is the United States government or
2
3 (b) the taxpayer is not doing business in the
3
4 state of the destination of the shipment.
4
5 (2) In the case of a railroad or interurban railway
5
6 enterprise, the numerator of the fraction shall
6
7 not be less than the allocation of revenues to
7
8 this state as shown in its annual report to the
8
9 Corporation Commission.
9
10 (3) In the case of an airline, truck or bus
10
11 enterprise or freight car, tank car, refrigerator
11
12 car or other railroad equipment enterprise, the
12
13 numerator of the fraction shall include a portion
13
14 of revenue from interstate transportation in the
14
15 proportion that interstate mileage traveled in
15
16 Oklahoma this state bears to total interstate
16
17 mileage traveled.
17
18 (4) In the case of an oil, gasoline or gas pipeline
18
19 enterprise, the numerator of the fraction shall
19
20 be either the total of traffic units of the
20
21 enterprise within Oklahoma this state or the
21
22 revenue allocated to Oklahoma this state based
22
23 upon miles moved, at the option of the taxpayer,
23
24 and the denominator of which shall be the total
24
Req. No. 974 Page 40
1 of traffic units of the enterprise or the revenue
1
2 of the enterprise everywhere as appropriate to
2
3 the numerator. A "traffic unit" is hereby
3
4 defined as the transportation for a distance of
4
5 one (1) mile of one (1) barrel of oil, one (1)
5
6 gallon of gasoline or one thousand (1,000) cubic
6
7 feet of natural or casinghead gas, as the case
7
8 may be.
8
9 (5) In the case of a telephone or telegraph or other
9
10 communication enterprise, the numerator of the
10
11 fraction shall include that portion of the
11
12 interstate revenue as is allocated pursuant to
12
13 the accounting procedures prescribed by the
13
14 Federal Communications Commission; provided that
14
15 in respect to each corporation or business entity
15
16 required by the Federal Communications Commission
16
17 to keep its books and records in accordance with
17
18 a uniform system of accounts prescribed by such
18
19 Commission, the intrastate net income shall be
19
20 determined separately in the manner provided by
20
21 such uniform system of accounts and only the
21
22 interstate income shall be subject to allocation
22
23 pursuant to the provisions of this subsection.
23
24 Provided further, that the gross revenue factors
24
Req. No. 974 Page 41
1 shall be those as are determined pursuant to the
1
2 accounting procedures prescribed by the Federal
2
3 Communications Commission.
3
4 In any case where the apportionment of the three factors
4
5 prescribed in this paragraph attributes to Oklahoma this state a
5
6 portion of net income of the enterprise out of all appropriate
6
7 proportion to the property owned and/or business transacted within
7
8 this state, because of the fact that one or more of the factors so
8
9 prescribed are not employed to any appreciable extent in furtherance
9
10 of the enterprise; or because one or more factors not so prescribed
10
11 are employed to a considerable extent in furtherance of the
11
12 enterprise; or because of other reasons, the Tax Commission is
12
13 empowered to permit, after a showing by taxpayer that an excessive
13
14 portion of net income has been attributed to Oklahoma this state, or
14
15 require, when in its judgment an insufficient portion of net income
15
16 has been attributed to Oklahoma this state, the elimination,
16
17 substitution, or use of additional factors, or reduction or increase
17
18 in the weight of such prescribed factors. Provided, however, that
18
19 any such variance from such prescribed factors which has the effect
19
20 of increasing the portion of net income attributable to Oklahoma
20
21 this state must not be inherently arbitrary, and application of the
21
22 recomputed final apportionment to the net income of the enterprise
22
23 must attribute to Oklahoma this state only a reasonable portion
23
24 thereof.
24
Req. No. 974 Page 42
1 6. For calendar years 1997 and 1998, the owner of a new or
1
2 expanded agricultural commodity processing facility in this state
2
3 may exclude from Oklahoma taxable income, or in the case of an
3
4 individual, the Oklahoma adjusted gross income, fifteen percent
4
5 (15%) of the investment by the owner in the new or expanded
5
6 agricultural commodity processing facility. For calendar year 1999,
6
7 and all subsequent years, the percentage, not to exceed fifteen
7
8 percent (15%), available to the owner of a new or expanded
8
9 agricultural commodity processing facility in this state claiming
9
10 the exemption shall be adjusted annually so that the total estimated
10
11 reduction in tax liability does not exceed One Million Dollars
11
12 ($1,000,000.00) annually. The Tax Commission shall promulgate rules
12
13 for determining the percentage of the investment which each eligible
13
14 taxpayer may exclude. The exclusion provided by this paragraph
14
15 shall be taken in the taxable year when the investment is made. In
15
16 the event the total reduction in tax liability authorized by this
16
17 paragraph exceeds One Million Dollars ($1,000,000.00) in any
17
18 calendar year, the Tax Commission shall permit any excess over One
18
19 Million Dollars ($1,000,000.00) and shall factor such excess into
19
20 the percentage for subsequent years. Any amount of the exemption
20
21 permitted to be excluded pursuant to the provisions of this
21
22 paragraph but not used in any year may be carried forward as an
22
23 exemption from income pursuant to the provisions of this paragraph
23
24
24
Req. No. 974 Page 43
1 for a period not exceeding six (6) years following the year in which
1
2 the investment was originally made.
2
3 For purposes of this paragraph:
3
4 a. "Agricultural commodity processing facility" means
4
5 building buildings, structures, fixtures and
5
6 improvements used or operated primarily for the
6
7 processing or production of marketable products from
7
8 agricultural commodities. The term shall also mean a
8
9 dairy operation that requires a depreciable investment
9
10 of at least Two Hundred Fifty Thousand Dollars
10
11 ($250,000.00) and which produces milk from dairy cows.
11
12 The term does not include a facility that provides
12
13 only, and nothing more than, storage, cleaning, drying
13
14 or transportation of agricultural commodities, and
14
15 b. "Facility" means each part of the facility which is
15
16 used in a process primarily for:
16
17 (1) the processing of agricultural commodities,
17
18 including receiving or storing agricultural
18
19 commodities, or the production of milk at a dairy
19
20 operation,
20
21 (2) transporting the agricultural commodities or
21
22 product before, during or after the processing,
22
23 or
23
24
24
Req. No. 974 Page 44
1 (3) packaging or otherwise preparing the product for
1
2 sale or shipment.
2
3 7. Despite any provision to the contrary in paragraph 3 of this
3
4 subsection, for taxable years beginning after December 31, 1999, in
4
5 the case of a taxpayer which has a farming loss, such farming loss
5
6 shall be considered a net operating loss carryback in accordance
6
7 with and to the extent of the Internal Revenue Code of 1986, as
7
8 amended, 26 U.S.C., Section 172(b)(G) 172(b)(1)(B). However, the
8
9 amount of the net operating loss carryback shall not exceed the
9
10 lesser of:
10
11 a. Sixty Thousand Dollars ($60,000.00), or
11
12 b. the loss properly shown on Schedule F of the Internal
12
13 Revenue Service Form 1040 reduced by one-half (1/2) of
13
14 the income from all other sources other than reflected
14
15 on Schedule F.
15
16 8. In taxable years beginning after December 31, 1995, all
16
17 qualified wages equal to the federal income tax credit set forth in
17
18 26 U.S.C.A., Section 45A, shall be deducted from taxable income.
18
19 The deduction allowed pursuant to this paragraph shall only be
19
20 permitted for the tax years in which the federal tax credit pursuant
20
21 to 26 U.S.C.A., Section 45A, is allowed. For purposes of this
21
22 paragraph, "qualified wages" means those wages used to calculate the
22
23 federal credit pursuant to 26 U.S.C.A., Section 45A.
23
24
24
Req. No. 974 Page 45
1 9. In taxable years beginning after December 31, 2005, an
1
2 employer that is eligible for and utilizes the Safety Pays OSHA
2
3 Consultation Service provided by the Oklahoma Department of Labor
3
4 shall receive an exemption from taxable income in the amount of One
4
5 Thousand Dollars ($1,000.00) for the tax year that the service is
5
6 utilized.
6
7 10. For taxable years beginning on or after January 1, 2010,
7
8 there shall be added to Oklahoma taxable income an amount equal to
8
9 the amount of deferred income not included in such taxable income
9
10 pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986
10
11 as amended by Section 1231 of the American Recovery and Reinvestment
11
12 Act of 2009 (P.L. No. 111-5). There shall be subtracted from
12
13 Oklahoma taxable income an amount equal to the amount of deferred
13
14 income included in such taxable income pursuant to Section 108(i)(1)
14
15 of the Internal Revenue Code of 1986 as amended by Section 1231 of
15
16 the American Recovery and Reinvestment Act of 2009 (P.L. No. 111-5).
16
17 11. For taxable years beginning on or after January 1, 2019,
17
18 there shall be subtracted from Oklahoma taxable income or adjusted
18
19 gross income any item of income or gain, and there shall be added to
19
20 Oklahoma taxable income or adjusted gross income any item of loss or
20
21 deduction that in the absence of an election pursuant to the
21
22 provisions of the Pass-Through Entity Tax Equity Act of 2019 would
22
23 be allocated to a member or to an indirect member of an electing
23
24 pass-through entity pursuant to Section 2351 et seq. of this title,
24
Req. No. 974 Page 46
1 if (i) the electing pass-through entity has accounted for such item
1
2 in computing its Oklahoma net entity income or loss pursuant to the
2
3 provisions of the Pass-Through Entity Tax Equity Act of 2019, and
3
4 (ii) the total amount of tax attributable to any resulting Oklahoma
4
5 net entity income has been paid. The Oklahoma Tax Commission shall
5
6 promulgate rules for the reporting of such exclusion to direct and
6
7 indirect members of the electing pass-through entity. As used in
7
8 this paragraph, "electing pass-through entity", "indirect member",
8
9 and "member" shall be defined in the same manner as prescribed by
9
10 Section 2355.1P-2 of this title. Notwithstanding the application of
10
11 this paragraph, the adjusted tax basis of any ownership interest in
11
12 a pass-through entity for purposes of Section 2351 et seq. of this
12
13 title shall be equal to its adjusted tax basis for federal income
13
14 tax purposes.
14
15 B. 1. The taxable income of any corporation shall be further
15
16 adjusted to arrive at Oklahoma taxable income, except those
16
17 corporations electing treatment as provided in subchapter S of the
17
18 Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 1361
18
19 et seq., and Section 2365 of this title, deductions pursuant to the
19
20 provisions of the Accelerated Cost Recovery System as defined
20
21 provided and allowed in the Economic Recovery Tax Act of 1981,
21
22 Public Law 97-34, 26 U.S.C., Section 168, for depreciation of assets
22
23 placed into service after December 31, 1981, shall not be allowed in
23
24 calculating Oklahoma taxable income. Such corporations shall be
24
Req. No. 974 Page 47
1 allowed a deduction for depreciation of assets placed into service
1
2 after December 31, 1981, in accordance with provisions of the
2
3 Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 1 et
3
4 seq., in effect immediately prior to the enactment of the
4
5 Accelerated Cost Recovery System. The Oklahoma tax basis for all
5
6 such assets placed into service after December 31, 1981, calculated
6
7 in this section shall be retained and utilized for all Oklahoma
7
8 income tax purposes through the final disposition of such assets.
8
9 Notwithstanding any other provisions of the Oklahoma Income Tax
9
10 Act, Section 2351 et seq. of this title, or of the Internal Revenue
10
11 Code of 1986, as amended, to the contrary, this subsection shall
11
12 control calculation of depreciation of assets placed into service
12
13 after December 31, 1981, and before January 1, 1983.
13
14 For assets placed in service and held by a corporation in which
14
15 accelerated cost recovery system the Accelerated Cost Recovery
15
16 System was previously disallowed, an adjustment to taxable income is
16
17 required in the first taxable year beginning after December 31,
17
18 1982, to reconcile the basis of such assets to the basis allowed in
18
19 the Internal Revenue Code of 1986, as amended. The purpose of this
19
20 adjustment is to equalize the basis and allowance for depreciation
20
21 accounts between that reported to the Internal Revenue Service and
21
22 that reported to Oklahoma this state.
22
23 2. For tax years beginning on or after January 1, 2009, and
23
24 ending on or before December 31, 2009, there shall be added to
24
Req. No. 974 Page 48
1 Oklahoma taxable income any amount in excess of One Hundred Seventy-
1
2 five Thousand Dollars ($175,000.00) which has been deducted as a
2
3 small business expense under Internal Revenue Code of 1986, as
3
4 amended, Section 179 as provided in the American Recovery and
4
5 Reinvestment Act of 2009.
5
6 C. 1. For taxable years beginning after December 31, 1987, the
6
7 taxable income of any corporation shall be further adjusted to
7
8 arrive at Oklahoma taxable income for transfers of technology to
8
9 qualified small businesses located in Oklahoma this state. Such
9
10 transferor corporation shall be allowed an exemption from taxable
10
11 income of an amount equal to the amount of royalty payment received
11
12 as a result of such transfer; provided, however, such amount shall
12
13 not exceed ten percent (10%) of the amount of gross proceeds
13
14 received by such transferor corporation as a result of the
14
15 technology transfer. Such exemption shall be allowed for a period
15
16 not to exceed ten (10) years from the date of receipt of the first
16
17 royalty payment accruing from such transfer. No exemption may be
17
18 claimed for transfers of technology to qualified small businesses
18
19 made prior to January 1, 1988.
19
20 2. For purposes of this subsection:
20
21 a. "Qualified small business" means an entity, whether
21
22 organized as a corporation, partnership, or
22
23 proprietorship, organized for profit with its
23
24
24
Req. No. 974 Page 49
1 principal place of business located within this state
1
2 and which meets the following criteria:
2
3 (1) Capitalization of not more than Two Hundred Fifty
3
4 Thousand Dollars ($250,000.00),
4
5 (2) Having at least fifty percent (50%) of its
5
6 employees and assets located in Oklahoma this
6
7 state at the time of the transfer, and
7
8 (3) Not a subsidiary or affiliate of the transferor
8
9 corporation;
9
10 b. "Technology" means a proprietary process, formula,
10
11 pattern, device or compilation of scientific or
11
12 technical information which is not in the public
12
13 domain;
13
14 c. "Transferor corporation" means a corporation which is
14
15 the exclusive and undisputed owner of the technology
15
16 at the time the transfer is made; and
16
17 d. "Gross proceeds" means the total amount of
17
18 consideration for the transfer of technology, whether
18
19 the consideration is in money or otherwise.
19
20 D. 1. For taxable years beginning after December 31, 2005, the
20
21 taxable income of any corporation, estate or trust, shall be further
21
22 adjusted for qualifying gains receiving capital treatment. Such
22
23 corporations, estates or trusts shall be allowed a deduction from
23
24 Oklahoma taxable income for one hundred percent (100%) of the amount
24
Req. No. 974 Page 50
1 for tax years 2006 through 2024 and, for tax year 2025 and
1
2 subsequent tax years, fifty percent (50%) of the amount of
2
3 qualifying gains receiving capital treatment earned by the
3
4 corporation, estate or trust during the taxable year and included in
4
5 the federal taxable income of such corporation, estate or trust.
5
6 2. As used in this subsection:
6
7 a. "qualifying gains receiving capital treatment" means
7
8 the amount of net capital gains, as defined in Section
8
9 1222(11) of the Internal Revenue Code of 1986, as
9
10 amended, included in the federal income tax return of
10
11 the corporation, estate or trust that result from:
11
12 (1) the sale of real property or tangible personal
12
13 property located within Oklahoma this state that
13
14 has been directly or indirectly owned by the
14
15 corporation, estate or trust for a holding period
15
16 of at least five (5) years prior to the date of
16
17 the transaction from which such net capital gains
17
18 arise,
18
19 (2) the sale of stock or on the sale of an ownership
19
20 interest in an Oklahoma company, limited
20
21 liability company, or partnership where such
21
22 stock or ownership interest has been directly or
22
23 indirectly owned by the corporation, estate or
23
24 trust for a holding period of at least three (3)
24
Req. No. 974 Page 51
1 years prior to the date of the transaction from
1
2 which the net capital gains arise, or
2
3 (3) the sale of real property, tangible personal
3
4 property or intangible personal property located
4
5 within Oklahoma this state as part of the sale of
5
6 all or substantially all of the assets of an
6
7 Oklahoma company, limited liability company, or
7
8 partnership where such property has been directly
8
9 or indirectly owned by such entity owned by the
9
10 owners of such entity, and used in or derived
10
11 from such entity for a period of at least three
11
12 (3) years prior to the date of the transaction
12
13 from which the net capital gains arise,
13
14 b. "holding period" means an uninterrupted period of
14
15 time. The holding period shall include any additional
15
16 period when the property was held by another
16
17 individual or entity, if such additional period is
17
18 included in the taxpayer's holding period for the
18
19 asset pursuant to the Internal Revenue Code of 1986,
19
20 as amended,
20
21 c. "Oklahoma company", "limited liability company", or
21
22 "partnership" means an entity whose primary
22
23 headquarters have been located in Oklahoma this state
23
24 for at least three (3) uninterrupted years prior to
24
Req. No. 974 Page 52
1 the date of the transaction from which the net capital
1
2 gains arise,
2
3 d. "direct" means the taxpayer directly owns the asset,
3
4 and
4
5 e. "indirect" means the taxpayer owns an interest in a
5
6 pass-through entity (or chain of pass-through
6
7 entities) that sells the asset that gives rise to the
7
8 qualifying gains receiving capital treatment.
8
9 (1) With respect to sales of real property or
9
10 tangible personal property located within
10
11 Oklahoma this state, the deduction described in
11
12 this subsection shall not apply unless the pass-
12
13 through entity that makes the sale has held the
13
14 property for not less than five (5) uninterrupted
14
15 years prior to the date of the transaction that
15
16 created the capital gain, and each pass-through
16
17 entity included in the chain of ownership has
17
18 been a member, partner, or shareholder of the
18
19 pass-through entity in the tier immediately below
19
20 it for an uninterrupted period of not less than
20
21 five (5) years.
21
22 (2) With respect to sales of stock or ownership
22
23 interest in or sales of all or substantially all
23
24 of the assets of an Oklahoma company, limited
24
Req. No. 974 Page 53
1 liability company, or partnership, the deduction
1
2 described in this subsection shall not apply
2
3 unless the pass-through entity that makes the
3
4 sale has held the stock or ownership interest or
4
5 the assets for not less than three (3)
5
6 uninterrupted years prior to the date of the
6
7 transaction that created the capital gain, and
7
8 each pass-through entity included in the chain of
8
9 ownership has been a member, partner or
9
10 shareholder of the pass-through entity in the
10
11 tier immediately below it for an uninterrupted
11
12 period of not less than three (3) years.
12
13 E. The Oklahoma adjusted gross income of any individual
13
14 taxpayer shall be further adjusted as follows to arrive at Oklahoma
14
15 taxable income:
15
16 1. a. In the case of individuals, there shall be added or
16
17 deducted, as the case may be, the difference necessary
17
18 to allow personal exemptions of One Thousand Dollars
18
19 ($1,000.00) in lieu of the personal exemptions allowed
19
20 by the Internal Revenue Code of 1986, as amended.
20
21 b. There shall be allowed an additional exemption of One
21
22 Thousand Dollars ($1,000.00) for each taxpayer or
22
23 spouse who is blind at the close of the tax year. For
23
24 purposes of this subparagraph, an individual is blind
24
Req. No. 974 Page 54
1 only if the central visual acuity of the individual
1
2 does not exceed 20/200 in the better eye with
2
3 correcting lenses, or if the visual acuity of the
3
4 individual is greater than 20/200, but is accompanied
4
5 by a limitation in the fields of vision such that the
5
6 widest diameter of the visual field subtends an angle
6
7 no greater than twenty (20) degrees.
7
8 c. There shall be allowed an additional exemption of One
8
9 Thousand Dollars ($1,000.00) for each taxpayer or
9
10 spouse who is sixty-five (65) years of age or older at
10
11 the close of the tax year based upon the filing status
11
12 and federal adjusted gross income of the taxpayer.
12
13 Taxpayers with the following filing status may claim
13
14 this exemption if the federal adjusted gross income
14
15 does not exceed:
15
16 (1) Twenty-five Thousand Dollars ($25,000.00) if
16
17 married and filing jointly,
17
18 (2) Twelve Thousand Five Hundred Dollars ($12,500.00)
18
19 if married and filing separately,
19
20 (3) Fifteen Thousand Dollars ($15,000.00) if single,
20
21 and
21
22 (4) Nineteen Thousand Dollars ($19,000.00) if a
22
23 qualifying head of household.
23
24
24
Req. No. 974 Page 55
1 Provided, for taxable years beginning after December
1
2 31, 1999, amounts included in the calculation of
2
3 federal adjusted gross income pursuant to the
3
4 conversion of a traditional individual retirement
4
5 account to a Roth individual retirement account shall
5
6 be excluded from federal adjusted gross income for
6
7 purposes of the income thresholds provided in this
7
8 subparagraph.
8
9 2. a. For taxable years beginning on or before December 31,
9
10 2005, in the case of individuals who use the standard
10
11 deduction in determining taxable income, there shall
11
12 be added or deducted, as the case may be, the
12
13 difference necessary to allow a standard deduction in
13
14 lieu of the standard deduction allowed by the Internal
14
15 Revenue Code of 1986, as amended, in an amount equal
15
16 to the larger of fifteen percent (15%) of the Oklahoma
16
17 adjusted gross income or One Thousand Dollars
17
18 ($1,000.00), but not to exceed Two Thousand Dollars
18
19 ($2,000.00), except that in the case of a married
19
20 individual filing a separate return such deduction
20
21 shall be the larger of fifteen percent (15%) of such
21
22 Oklahoma adjusted gross income or Five Hundred Dollars
22
23 ($500.00), but not to exceed the maximum amount of One
23
24 Thousand Dollars ($1,000.00).
24
Req. No. 974 Page 56
1 b. For taxable years beginning on or after January 1,
1
2 2006, and before January 1, 2007, in the case of
2
3 individuals who use the standard deduction in
3
4 determining taxable income, there shall be added or
4
5 deducted, as the case may be, the difference necessary
5
6 to allow a standard deduction in lieu of the standard
6
7 deduction allowed by the Internal Revenue Code of
7
8 1986, as amended, in an amount equal to:
8
9 (1) Three Thousand Dollars ($3,000.00), if the filing
9
10 status is married filing joint, head of household
10
11 or qualifying widow, or
11
12 (2) Two Thousand Dollars ($2,000.00), if the filing
12
13 status is single or married filing separate.
13
14 c. For the taxable year beginning on January 1, 2007, and
14
15 ending December 31, 2007, in the case of individuals
15
16 who use the standard deduction in determining taxable
16
17 income, there shall be added or deducted, as the case
17
18 may be, the difference necessary to allow a standard
18
19 deduction in lieu of the standard deduction allowed by
19
20 the Internal Revenue Code of 1986, as amended, in an
20
21 amount equal to:
21
22 (1) Five Thousand Five Hundred Dollars ($5,500.00),
22
23 if the filing status is married filing joint or
23
24 qualifying widow, or
24
Req. No. 974 Page 57
1 (2) Four Thousand One Hundred Twenty-five Dollars
1
2 ($4,125.00) for a head of household, or
2
3 (3) Two Thousand Seven Hundred Fifty Dollars
3
4 ($2,750.00), if the filing status is single or
4
5 married filing separate.
5
6 d. For the taxable year beginning on January 1, 2008, and
6
7 ending December 31, 2008, in the case of individuals
7
8 who use the standard deduction in determining taxable
8
9 income, there shall be added or deducted, as the case
9
10 may be, the difference necessary to allow a standard
10
11 deduction in lieu of the standard deduction allowed by
11
12 the Internal Revenue Code of 1986, as amended, in an
12
13 amount equal to:
13
14 (1) Six Thousand Five Hundred Dollars ($6,500.00), if
14
15 the filing status is married filing joint or
15
16 qualifying widow,
16
17 (2) Four Thousand Eight Hundred Seventy-five Dollars
17
18 ($4,875.00) for a head of household, or
18
19 (3) Three Thousand Two Hundred Fifty Dollars
19
20 ($3,250.00), if the filing status is single or
20
21 married filing separate.
21
22 e. For the taxable year beginning on January 1, 2009, and
22
23 ending December 31, 2009, in the case of individuals
23
24 who use the standard deduction in determining taxable
24
Req. No. 974 Page 58
1 income, there shall be added or deducted, as the case
1
2 may be, the difference necessary to allow a standard
2
3 deduction in lieu of the standard deduction allowed by
3
4 the Internal Revenue Code of 1986, as amended, in an
4
5 amount equal to:
5
6 (1) Eight Thousand Five Hundred Dollars ($8,500.00),
6
7 if the filing status is married filing joint or
7
8 qualifying widow,
8
9 (2) Six Thousand Three Hundred Seventy-five Dollars
9
10 ($6,375.00) for a head of household, or
10
11 (3) Four Thousand Two Hundred Fifty Dollars
11
12 ($4,250.00), if the filing status is single or
12
13 married filing separate.
13
14 Oklahoma adjusted gross income shall be increased by
14
15 any amounts paid for motor vehicle excise taxes which
15
16 were deducted as allowed by the Internal Revenue Code
16
17 of 1986, as amended.
17
18 f. For taxable years beginning on or after January 1,
18
19 2010, and ending on December 31, 2016, in the case of
19
20 individuals who use the standard deduction in
20
21 determining taxable income, there shall be added or
21
22 deducted, as the case may be, the difference necessary
22
23 to allow a standard deduction equal to the standard
23
24 deduction allowed by the Internal Revenue Code of
24
Req. No. 974 Page 59
1 1986, as amended, based upon the amount and filing
1
2 status prescribed by such Code for purposes of filing
2
3 federal individual income tax returns.
3
4 g. For taxable years beginning on or after January 1,
4
5 2017 tax years 2017 through 2025, in the case of
5
6 individuals who use the standard deduction in
6
7 determining taxable income, there shall be added or
7
8 deducted, as the case may be, the difference necessary
8
9 to allow a standard deduction in lieu of the standard
9
10 deduction allowed by the Internal Revenue Code of
10
11 1986, as amended, as follows:
11
12 (1) Six Thousand Three Hundred Fifty Dollars
12
13 ($6,350.00) for single or married filing
13
14 separately,
14
15 (2) Twelve Thousand Seven Hundred Dollars
15
16 ($12,700.00) for married filing jointly or
16
17 qualifying widower with dependent child, and
17
18 (3) Nine Thousand Three Hundred Fifty Dollars
18
19 ($9,350.00) for head of household.
19
20 h. For tax year 2025 and subsequent tax years, in the
20
21 case of individuals who use the standard deduction in
21
22 determining taxable income, there shall be added or
22
23 deducted, as the case may be, the difference necessary
23
24 to allow a standard deduction in lieu of the standard
24
Req. No. 974 Page 60
1 deduction allowed by the Internal Revenue Code of
1
2 1986, as amended, as follows:
2
3 (1) Fifteen Thousand Dollars ($15,000.00) for single
3
4 or married filing separately,
4
5 (2) Thirty Thousand Dollars ($30,000.00) for married
5
6 filing jointly or qualifying widower with
6
7 dependent child, and
7
8 (3) Twenty-two Thousand Five Hundred Dollars
8
9 ($22,500.00) for head of household.
9
10 3. a. In the case of resident and part-year resident
10
11 individuals having adjusted gross income from sources
11
12 both within and without the state, the itemized or
12
13 standard deductions and personal exemptions shall be
13
14 reduced to an amount which is the same portion of the
14
15 total thereof as Oklahoma adjusted gross income is of
15
16 adjusted gross income. To the extent itemized
16
17 deductions include allowable moving expense, proration
17
18 of moving expense shall not be required or permitted
18
19 but allowable moving expense shall be fully deductible
19
20 for those taxpayers moving within or into Oklahoma
20
21 this state and no part of moving expense shall be
21
22 deductible for those taxpayers moving without or out
22
23 of Oklahoma this state. All other itemized or
23
24
24
Req. No. 974 Page 61
1 standard deductions and personal exemptions shall be
1
2 subject to proration as provided by law.
2
3 b. For taxable years beginning on or after January 1,
3
4 2018, the net amount of itemized deductions allowable
4
5 on an Oklahoma income tax return, subject to the
5
6 provisions of paragraph 24 of this subsection, shall
6
7 not exceed Seventeen Thousand Dollars ($17,000.00).
7
8 For purposes of this subparagraph, charitable
8
9 contributions and medical expenses deductible for
9
10 federal income tax purposes shall be excluded from the
10
11 amount of Seventeen Thousand Dollars ($17,000.00) as
11
12 specified by this subparagraph.
12
13 4. A resident individual with a physical disability
13
14 constituting a substantial handicap to employment may deduct from
14
15 Oklahoma adjusted gross income such expenditures to modify a motor
15
16 vehicle, home or workplace as are necessary to compensate for his or
16
17 her handicap. A veteran certified by the United States Department
17
18 of Veterans Affairs of the federal government as having a service-
18
19 connected disability shall be conclusively presumed to be an
19
20 individual with a physical disability constituting a substantial
20
21 handicap to employment. The Tax Commission shall promulgate rules
21
22 containing a list of combinations of common disabilities and
22
23 modifications which may be presumed to qualify for this deduction.
23
24
24
Req. No. 974 Page 62
1 The Tax Commission shall prescribe necessary requirements for
1
2 verification.
2
3 5. a. Before July 1, 2010, the first One Thousand Five
3
4 Hundred Dollars ($1,500.00) received by any person
4
5 from the United States as salary or compensation in
5
6 any form, other than retirement benefits, as a member
6
7 of any component of the Armed Forces of the United
7
8 States shall be deducted from taxable income.
8
9 b. On or after July 1, 2010, one hundred percent (100%)
9
10 of the income received by any person from the United
10
11 States as salary or compensation in any form, other
11
12 than retirement benefits, as a member of any component
12
13 of the Armed Forces of the United States shall be
13
14 deducted from taxable income.
14
15 c. Whenever the filing of a timely income tax return by a
15
16 member of the Armed Forces of the United States is
16
17 made impracticable or impossible of accomplishment by
17
18 reason of:
18
19 (1) absence from the United States, which term
19
20 includes only the states and the District of
20
21 Columbia,
21
22 (2) absence from the State of Oklahoma this state
22
23 while on active duty, or
23
24
24
Req. No. 974 Page 63
1 (3) confinement in a hospital within the United
1
2 States for treatment of wounds, injuries or
2
3 disease,
3
4 the time for filing a return and paying an income tax
4
5 shall be and is hereby extended without incurring
5
6 liability for interest or penalties, to the fifteenth
6
7 day of the third month following the month in which:
7
8 (a) Such individual shall return to the United
8
9 States if the extension is granted pursuant
9
10 to subparagraph a division 1 of this
10
11 paragraph subparagraph, return to the State
11
12 of Oklahoma this state if the extension is
12
13 granted pursuant to subparagraph b division
13
14 2 of this paragraph subparagraph or be
14
15 discharged from such hospital if the
15
16 extension is granted pursuant to
16
17 subparagraph c division 3 of this paragraph
17
18 subparagraph, or
18
19 (b) An executor, administrator, or conservator
19
20 of the estate of the taxpayer is appointed,
20
21 whichever event occurs the earliest.
21
22 Provided, that the Tax Commission may, in its discretion, grant
22
23 any member of the Armed Forces of the United States an extension of
23
24 time for filing of income tax returns and payment of income tax
24
Req. No. 974 Page 64
1 without incurring liabilities for interest or penalties. Such
1
2 extension may be granted only when in the judgment of the Tax
2
3 Commission a good cause exists therefor and may be for a period in
3
4 excess of six (6) months. A record of every such extension granted,
4
5 and the reason therefor, shall be kept.
5
6 6. Before July 1, 2010, the salary or any other form of
6
7 compensation, received from the United States by a member of any
7
8 component of the Armed Forces of the United States, shall be
8
9 deducted from taxable income during the time in which the person is
9
10 detained by the enemy in a conflict, is a prisoner of war or is
10
11 missing in action and not deceased; provided, after July 1, 2010,
11
12 all such salary or compensation shall be subject to the deduction as
12
13 provided pursuant to paragraph 5 of this subsection.
13
14 7. a. An individual taxpayer, whether resident or
14
15 nonresident, may deduct an amount equal to the federal
15
16 income taxes paid by the taxpayer during the taxable
16
17 year.
17
18 b. Federal taxes as described in subparagraph a of this
18
19 paragraph shall be deductible by any individual
19
20 taxpayer, whether resident or nonresident, only to the
20
21 extent they relate to income subject to taxation
21
22 pursuant to the provisions of the Oklahoma Income Tax
22
23 Act. The maximum amount allowable in the preceding
23
24 paragraph 5 of this subsection shall be prorated on
24
Req. No. 974 Page 65
1 the ratio of the Oklahoma adjusted gross income to
1
2 federal adjusted gross income.
2
3 c. For the purpose of this paragraph, "federal income
3
4 taxes paid" shall mean federal income taxes, surtaxes
4
5 imposed on incomes or excess profits taxes, as though
5
6 the taxpayer was on the accrual basis. In determining
6
7 the amount of deduction for federal income taxes for
7
8 tax year 2001, the amount of the deduction shall not
8
9 be adjusted by the amount of any accelerated ten
9
10 percent (10%) tax rate bracket credit or advanced
10
11 refund of the credit received during the tax year
11
12 provided pursuant to the federal Economic Growth and
12
13 Tax Relief Reconciliation Act of 2001, P.L. No. 107-
13
14 16, and the advanced refund of such credit shall not
14
15 be subject to taxation.
15
16 d. The provisions of this paragraph shall apply to all
16
17 taxable years ending after December 31, 1978, and
17
18 beginning before January 1, 2006.
18
19 8. Retirement benefits not to exceed Five Thousand Five Hundred
19
20 Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five
20
21 Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand
21
22 Dollars ($10,000.00) for the 2006 tax year and all subsequent tax
22
23 years, which are received by an individual from the civil service of
23
24 the United States, the Oklahoma Public Employees Retirement System,
24
Req. No. 974 Page 66
1 the Teachers' Retirement System of Oklahoma, the Oklahoma Law
1
2 Enforcement Retirement System, the Oklahoma Firefighters Pension and
2
3 Retirement System, the Oklahoma Police Pension and Retirement
3
4 System, the employee retirement systems created by counties pursuant
4
5 to Section 951 et seq. of Title 19 of the Oklahoma Statutes, the The
5
6 Uniform Retirement System for Justices and Judges, the Oklahoma
6
7 Wildlife Conservation Department Retirement Fund, the Oklahoma
7
8 Employment Security Commission Retirement Plan, or the employee
8
9 retirement systems created by municipalities pursuant to Section 48-
9
10 101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt
10
11 from taxable income.
11
12 9. In taxable years beginning after December 3l, 1984, Social
12
13 Security benefits received by an individual shall be exempt from
13
14 taxable income, to the extent such benefits are included in the
14
15 federal adjusted gross income pursuant to the provisions of Section
15
16 86 of the Internal Revenue Code of 1986, as amended, 26 U.S.C.,
16
17 Section 86.
17
18 10. For taxable years beginning after December 31, 1994, lump-
18
19 sum distributions from employer plans of deferred compensation,
19
20 which are not qualified plans within the meaning of Section 401(a)
20
21 of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section
21
22 401(a), and which are deposited in and accounted for within a
22
23 separate bank account or brokerage account in a financial
23
24 institution within this state, shall be excluded from taxable income
24
Req. No. 974 Page 67
1 in the same manner as a qualifying rollover contribution to an
1
2 individual retirement account within the meaning of Section 408 of
2
3 the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section
3
4 408. Amounts withdrawn from such bank or brokerage account,
4
5 including any earnings thereon, shall be included in taxable income
5
6 when withdrawn in the same manner as withdrawals from individual
6
7 retirement accounts within the meaning of Section 408 of the
7
8 Internal Revenue Code of 1986, as amended.
8
9 11. In taxable years beginning after December 31, 1995,
9
10 contributions made to and interest received from a medical savings
10
11 account established pursuant to Sections 2621 through 2623 of Title
11
12 63 of the Oklahoma Statutes shall be exempt from taxable income.
12
13 12. For taxable years beginning after December 31, 1996, the
13
14 Oklahoma adjusted gross income of any individual taxpayer who is a
14
15 swine or poultry producer may be further adjusted for the deduction
15
16 for depreciation allowed for new construction or expansion costs
16
17 which may be computed using the same depreciation method elected for
17
18 federal income tax purposes except that the useful life shall be
18
19 seven (7) years for purposes of this paragraph. If depreciation is
19
20 allowed as a deduction in determining the adjusted gross income of
20
21 an individual, any depreciation calculated and claimed pursuant to
21
22 this section shall in no event be a duplication of any depreciation
22
23 allowed or permitted on the federal income tax return of the
23
24 individual.
24
Req. No. 974 Page 68
1 13. a. In taxable years beginning before January 1, 2005,
1
2 retirement benefits not to exceed the amounts
2
3 specified in this paragraph, which are received by an
3
4 individual sixty-five (65) years of age or older and
4
5 whose Oklahoma adjusted gross income is Twenty-five
5
6 Thousand Dollars ($25,000.00) or less if the filing
6
7 status is single, head of household, or married filing
7
8 separate, or Fifty Thousand Dollars ($50,000.00) or
8
9 less if the filing status is married filing joint or
9
10 qualifying widow, shall be exempt from taxable income.
10
11 In taxable years beginning after December 31, 2004,
11
12 retirement benefits not to exceed the amounts
12
13 specified in this paragraph, which are received by an
13
14 individual whose Oklahoma adjusted gross income is
14
15 less than the qualifying amount specified in this
15
16 paragraph, shall be exempt from taxable income.
16
17 b. For purposes of this paragraph, the qualifying amount
17
18 shall be as follows:
18
19 (1) in taxable years beginning after December 31,
19
20 2004, and prior to January 1, 2007, the
20
21 qualifying amount shall be Thirty-seven Thousand
21
22 Five Hundred Dollars ($37,500.00) or less if the
22
23 filing status is single, head of household, or
23
24 married filing separate, or Seventy-five Thousand
24
Req. No. 974 Page 69
1 Dollars ($75,000.00) or less if the filing status
1
2 is married filing jointly or qualifying widow,
2
3 (2) in the taxable year beginning January 1, 2007,
3
4 the qualifying amount shall be Fifty Thousand
4
5 Dollars ($50,000.00) or less if the filing status
5
6 is single, head of household, or married filing
6
7 separate, or One Hundred Thousand Dollars
7
8 ($100,000.00) or less if the filing status is
8
9 married filing jointly or qualifying widow,
9
10 (3) in the taxable year beginning January 1, 2008,
10
11 the qualifying amount shall be Sixty-two Thousand
11
12 Five Hundred Dollars ($62,500.00) or less if the
12
13 filing status is single, head of household, or
13
14 married filing separate, or One Hundred Twenty-
14
15 five Thousand Dollars ($125,000.00) or less if
15
16 the filing status is married filing jointly or
16
17 qualifying widow,
17
18 (4) in the taxable year beginning January 1, 2009,
18
19 the qualifying amount shall be One Hundred
19
20 Thousand Dollars ($100,000.00) or less if the
20
21 filing status is single, head of household, or
21
22 married filing separate, or Two Hundred Thousand
22
23 Dollars ($200,000.00) or less if the filing
23
24
24
Req. No. 974 Page 70
1 status is married filing jointly or qualifying
1
2 widow, and
2
3 (5) in the taxable year beginning January 1, 2010,
3
4 and subsequent taxable years, there shall be no
4
5 limitation upon the qualifying amount.
5
6 c. For purposes of this paragraph, "retirement benefits"
6
7 means the total distributions or withdrawals from the
7
8 following:
8
9 (1) an employee pension benefit plan which satisfies
9
10 the requirements of Section 401 of the Internal
10
11 Revenue Code of 1986, as amended, 26 U.S.C.,
11
12 Section 401,
12
13 (2) an eligible deferred compensation plan that
13
14 satisfies the requirements of Section 457 of the
14
15 Internal Revenue Code of 1986, as amended, 26
15
16 U.S.C., Section 457,
16
17 (3) an individual retirement account, annuity or
17
18 trust or simplified employee pension that
18
19 satisfies the requirements of Section 408 of the
19
20 Internal Revenue Code of 1986, as amended, 26
20
21 U.S.C., Section 408,
21
22 (4) an employee annuity subject to the provisions of
22
23 Section 403(a) or (b) of the Internal Revenue
23
24
24
Req. No. 974 Page 71
1 Code of 1986, as amended, 26 U.S.C., Section
1
2 403(a) or (b),
2
3 (5) United States Retirement Bonds which satisfy the
3
4 requirements of Section 86 of the Internal
4
5 Revenue Code of 1986, as amended, 26 U.S.C.,
5
6 Section 86, or
6
7 (6) lump-sum distributions from a retirement plan
7
8 which satisfies the requirements of Section
8
9 402(e) of the Internal Revenue Code of 1986, as
9
10 amended, 26 U.S.C., Section 402(e).
10
11 d. The amount of the exemption provided by this paragraph
11
12 shall be limited to Five Thousand Five Hundred Dollars
12
13 ($5,500.00) for the 2004 tax year, Seven Thousand Five
13
14 Hundred Dollars ($7,500.00) for the 2005 tax year and
14
15 Ten Thousand Dollars ($10,000.00) for the tax year
15
16 2006 and for all subsequent tax years. Any individual
16
17 who claims the exemption provided for in paragraph 8
17
18 of this subsection shall not be permitted to claim a
18
19 combined total exemption pursuant to this paragraph
19
20 and paragraph 8 of this subsection in an amount
20
21 exceeding Five Thousand Five Hundred Dollars
21
22 ($5,500.00) for the 2004 tax year, Seven Thousand Five
22
23 Hundred Dollars ($7,500.00) for the 2005 tax year and
23
24
24
Req. No. 974 Page 72
1 Ten Thousand Dollars ($10,000.00) for the 2006 tax
1
2 year and all subsequent tax years.
2
3 14. In taxable years beginning after December 31, 1999, for an
3
4 individual engaged in production agriculture who has filed a
4
5 Schedule F form with the taxpayer's federal income tax return for
5
6 such taxable year, there shall be excluded from taxable income any
6
7 amount which was included as federal taxable income or federal
7
8 adjusted gross income and which consists of the discharge of an
8
9 obligation by a creditor of the taxpayer incurred to finance the
9
10 production of agricultural products.
10
11 15. In taxable years beginning December 31, 2000, an amount
11
12 equal to one hundred percent (100%) of the amount of any scholarship
12
13 or stipend received from participation in the Oklahoma Police Corps
13
14 Program, as established in Section 2-140.3 of Title 47 of the
14
15 Oklahoma Statutes shall be exempt from taxable income.
15
16 16. a. In taxable years beginning after December 31, 2001,
16
17 and before January 1, 2005, there shall be allowed a
17
18 deduction in the amount of contributions to accounts
18
19 established pursuant to the Oklahoma College Savings
19
20 Plan Act. The deduction shall equal the amount of
20
21 contributions to accounts, but in no event shall the
21
22 deduction for each contributor exceed Two Thousand
22
23 Five Hundred Dollars ($2,500.00) each taxable year for
23
24 each account.
24
Req. No. 974 Page 73
1 b. In taxable years beginning after December 31, 2004,
1
2 each taxpayer shall be allowed a deduction for
2
3 contributions to accounts established pursuant to the
3
4 Oklahoma College Savings Plan Act. The maximum annual
4
5 deduction shall equal the amount of contributions to
5
6 all such accounts plus any contributions to such
6
7 accounts by the taxpayer for prior taxable years after
7
8 December 31, 2004, which were not deducted, but in no
8
9 event shall the deduction for each tax year exceed Ten
9
10 Thousand Dollars ($10,000.00) for each individual
10
11 taxpayer or Twenty Thousand Dollars ($20,000.00) for
11
12 taxpayers filing a joint return. Any amount of a
12
13 contribution that is not deducted by the taxpayer in
13
14 the year for which the contribution is made may be
14
15 carried forward as a deduction from income for the
15
16 succeeding five (5) years. For taxable years
16
17 beginning after December 31, 2005, deductions may be
17
18 taken for contributions and rollovers made during a
18
19 taxable year and up to April 15 of the succeeding
19
20 year, or the due date of a taxpayer's state income tax
20
21 return, excluding extensions, whichever is later.
21
22 Provided, a deduction for the same contribution may
22
23 not be taken for two (2) different taxable years.
23
24
24
Req. No. 974 Page 74
1 c. In taxable years beginning after December 31, 2006,
1
2 deductions for contributions made pursuant to
2
3 subparagraph b of this paragraph shall be limited as
3
4 follows:
4
5 (1) for a taxpayer who qualified for the five-year
5
6 carryforward election and who takes a rollover or
6
7 nonqualified withdrawal during that period, the
7
8 tax deduction otherwise available pursuant to
8
9 subparagraph b of this paragraph shall be reduced
9
10 by the amount which is equal to the rollover or
10
11 nonqualified withdrawal, and
11
12 (2) for a taxpayer who elects to take a rollover or
12
13 nonqualified withdrawal within the same tax year
13
14 in which a contribution was made to the
14
15 taxpayer's account, the tax deduction otherwise
15
16 available pursuant to subparagraph b of this
16
17 paragraph shall be reduced by the amount of the
17
18 contribution which is equal to the rollover or
18
19 nonqualified withdrawal.
19
20 d. If a taxpayer elects to take a rollover on a
20
21 contribution for which a deduction has been taken
21
22 pursuant to subparagraph b of this paragraph within
22
23 one (1) year of the date of contribution, the amount
23
24 of such rollover shall be included in the adjusted
24
Req. No. 974 Page 75
1 gross income of the taxpayer in the taxable year of
1
2 the rollover.
2
3 e. If a taxpayer makes a nonqualified withdrawal of
3
4 contributions for which a deduction was taken pursuant
4
5 to subparagraph b of this paragraph, such nonqualified
5
6 withdrawal and any earnings thereon shall be included
6
7 in the adjusted gross income of the taxpayer in the
7
8 taxable year of the nonqualified withdrawal.
8
9 f. As used in this paragraph:
9
10 (1) "non-qualified withdrawal" means a withdrawal
10
11 from an Oklahoma College Savings Plan account
11
12 other than one of the following:
12
13 (a) a qualified withdrawal,
13
14 (b) a withdrawal made as a result of the death
14
15 or disability of the designated beneficiary
15
16 of an account,
16
17 (c) a withdrawal that is made on the account of
17
18 a scholarship or the allowance or payment
18
19 described in Section 135(d)(1)(B) or (C) or
19
20 by the Internal Revenue Code of 1986, as
20
21 amended, received by the designated
21
22 beneficiary to the extent the amount of the
22
23 refund does not exceed the amount of the
23
24 scholarship, allowance, or payment, or
24
Req. No. 974 Page 76
1 (d) a rollover or change of designated
1
2 beneficiary as permitted by subsection F of
2
3 Section 3970.7 of Title 70 of the Oklahoma
3
4 Statutes, and
4
5 (2) "rollover" means the transfer of funds from the
5
6 Oklahoma College Savings Plan to any other plan
6
7 under Section 529 of the Internal Revenue Code of
7
8 1986, as amended.
8
9 17. For tax years 2006 through 2021, retirement benefits
9
10 received by an individual from any component of the Armed Forces of
10
11 the United States in an amount not to exceed the greater of seventy-
11
12 five percent (75%) of such benefits or Ten Thousand Dollars
12
13 ($10,000.00) shall be exempt from taxable income but in no case less
13
14 than the amount of the exemption provided by paragraph 13 of this
14
15 subsection. For tax year 2022 and subsequent tax years, retirement
15
16 benefits received by an individual from any component of the Armed
16
17 Forces of the United States shall be exempt from taxable income.
17
18 18. For taxable years beginning after December 31, 2006,
18
19 retirement benefits received by federal civil service retirees,
19
20 including survivor annuities, paid in lieu of Social Security
20
21 benefits shall be exempt from taxable income to the extent such
21
22 benefits are included in the federal adjusted gross income pursuant
22
23 to the provisions of Section 86 of the Internal Revenue Code of
23
24
24
Req. No. 974 Page 77
1 1986, as amended, 26 U.S.C., Section 86, according to the following
1
2 schedule:
2
3 a. in the taxable year beginning January 1, 2007, twenty
3
4 percent (20%) of such benefits shall be exempt,
4
5 b. in the taxable year beginning January 1, 2008, forty
5
6 percent (40%) of such benefits shall be exempt,
6
7 c. in the taxable year beginning January 1, 2009, sixty
7
8 percent (60%) of such benefits shall be exempt,
8
9 d. in the taxable year beginning January 1, 2010, eighty
9
10 percent (80%) of such benefits shall be exempt, and
10
11 e. in the taxable year beginning January 1, 2011, and
11
12 subsequent taxable years, one hundred percent (100%)
12
13 of such benefits shall be exempt.
13
14 19. a. For taxable years beginning after December 31, 2007, a
14
15 resident individual may deduct up to Ten Thousand
15
16 Dollars ($10,000.00) from Oklahoma adjusted gross
16
17 income if the individual, or the dependent of the
17
18 individual, while living, donates one or more human
18
19 organs of the individual to another human being for
19
20 human organ transplantation. As used in this
20
21 paragraph, "human organ" means all or part of a liver,
21
22 pancreas, kidney, intestine, lung, or bone marrow. A
22
23 deduction that is claimed under this paragraph may be
23
24
24
Req. No. 974 Page 78
1 claimed in the taxable year in which the human organ
1
2 transplantation occurs.
2
3 b. An individual may claim this deduction only once, and
3
4 the deduction may be claimed only for unreimbursed
4
5 expenses that are incurred by the individual and
5
6 related to the organ donation of the individual.
6
7 c. The Oklahoma Tax Commission shall promulgate rules to
7
8 implement the provisions of this paragraph which shall
8
9 contain a specific list of expenses which may be
9
10 presumed to qualify for the deduction. The Tax
10
11 Commission shall prescribe necessary requirements for
11
12 verification.
12
13 20. For taxable years beginning after December 31, 2009, there
13
14 shall be exempt from taxable income any amount received by the
14
15 beneficiary of the death benefit for an emergency medical technician
15
16 or a registered emergency medical responder provided by Section 1-
16
17 2505.1 of Title 63 of the Oklahoma Statutes.
17
18 21. For taxable years beginning after December 31, 2008,
18
19 taxable income shall be increased by any unemployment compensation
19
20 exempted under Section 85(c) of the Internal Revenue Code of 1986,
20
21 as amended, 26 U.S.C., Section 85(c)(2009).
21
22 22. For taxable years beginning after December 31, 2008, there
22
23 shall be exempt from taxable income any payment in an amount less
23
24 than Six Hundred Dollars ($600.00) received by a person as an award
24
Req. No. 974 Page 79
1 for participation in a competitive livestock show event. For
1
2 purposes of this paragraph, the payment shall be treated as a
2
3 scholarship amount paid by the entity sponsoring the event and the
3
4 sponsoring entity shall cause the payment to be categorized as a
4
5 scholarship in its books and records.
5
6 23. For taxable years beginning on or after January 1, 2016,
6
7 taxable income shall be increased by any amount of state and local
7
8 sales or income taxes deducted under 26 U.S.C., Section 164 of the
8
9 Internal Revenue Code of 1986, as amended. If the amount of state
9
10 and local taxes deducted on the federal return is limited, taxable
10
11 income on the state return shall be increased only by the amount
11
12 actually deducted after any such limitations are applied.
12
13 24. For taxable years beginning after December 31, 2020, each
13
14 taxpayer shall be allowed a deduction for contributions to accounts
14
15 established pursuant to the Achieving a Better Life Experience
15
16 (ABLE) Program program as established in Section 4001.1 et seq. of
16
17 Title 56 of the Oklahoma Statutes. For any tax year, the deduction
17
18 provided for in this paragraph shall not exceed Ten Thousand Dollars
18
19 ($10,000.00) for an individual taxpayer or Twenty Thousand Dollars
19
20 ($20,000.00) for taxpayers filing a joint return. Any amount of
20
21 contribution not deducted by the taxpayer in the tax year for which
21
22 the contribution is made may be carried forward as a deduction from
22
23 income for up to five (5) tax years. Deductions may be taken for
23
24 contributions made during the tax year and through April 15 of the
24
Req. No. 974 Page 80
1 succeeding tax year, or through the due date of a taxpayer's state
1
2 income tax return excluding extensions, whichever is later.
2
3 Provided, a deduction for the same contribution may not be taken in
3
4 more than one (1) tax year.
4
5 F. 1. For taxable years beginning after December 31, 2004, a
5
6 deduction of one hundred percent (100%) of the amount for tax years
6
7 2005 through 2024 and, for tax year 2025 and subsequent tax years,
7
8 fifty percent (50%) of the amount from the Oklahoma adjusted gross
8
9 income of any individual taxpayer shall be allowed for qualifying
9
10 gains receiving capital treatment that are included in the federal
10
11 adjusted gross income of such individual taxpayer during the taxable
11
12 year.
12
13 2. As used in this subsection:
13
14 a. "qualifying gains receiving capital treatment" means
14
15 the amount of net capital gains, as defined in Section
15
16 1222(11) of the Internal Revenue Code of 1986, as
16
17 amended, included in an individual taxpayer's federal
17
18 income tax return that result from:
18
19 (1) the sale of real property or tangible personal
19
20 property located within Oklahoma this state that
20
21 has been directly or indirectly owned by the
21
22 individual taxpayer for a holding period of at
22
23 least five (5) years prior to the date of the
23
24
24
Req. No. 974 Page 81
1 transaction from which such net capital gains
1
2 arise,
2
3 (2) the sale of stock or the sale of a direct or
3
4 indirect ownership interest in an Oklahoma
4
5 company, limited liability company, or
5
6 partnership where such stock or ownership
6
7 interest has been directly or indirectly owned by
7
8 the individual taxpayer for a holding period of
8
9 at least two (2) years prior to the date of the
9
10 transaction from which the net capital gains
10
11 arise, or
11
12 (3) the sale of real property, tangible personal
12
13 property or intangible personal property located
13
14 within Oklahoma this state as part of the sale of
14
15 all or substantially all of the assets of an
15
16 Oklahoma company, limited liability company, or
16
17 partnership or an Oklahoma proprietorship
17
18 business enterprise where such property has been
18
19 directly or indirectly owned by such entity or
19
20 business enterprise or owned by the owners of
20
21 such entity or business enterprise for a period
21
22 of at least two (2) years prior to the date of
22
23 the transaction from which the net capital gains
23
24 arise,
24
Req. No. 974 Page 82
1 b. "holding period" means an uninterrupted period of
1
2 time. The holding period shall include any additional
2
3 period when the property was held by another
3
4 individual or entity, if such additional period is
4
5 included in the taxpayer's holding period for the
5
6 asset pursuant to the Internal Revenue Code of 1986,
6
7 as amended,
7
8 c. "Oklahoma company," "limited liability company," or
8
9 "partnership" means an entity whose primary
9
10 headquarters have been located in Oklahoma this state
10
11 for at least three (3) uninterrupted years prior to
11
12 the date of the transaction from which the net capital
12
13 gains arise,
13
14 d. "direct" means the individual taxpayer directly owns
14
15 the asset,
15
16 e. "indirect" means the individual taxpayer owns an
16
17 interest in a pass-through entity (or chain of pass-
17
18 through entities) that sells the asset that gives rise
18
19 to the qualifying gains receiving capital treatment.
19
20 (1) With respect to sales of real property or
20
21 tangible personal property located within
21
22 Oklahoma this state, the deduction described in
22
23 this subsection shall not apply unless the pass-
23
24 through entity that makes the sale has held the
24
Req. No. 974 Page 83
1 property for not less than five (5) uninterrupted
1
2 years prior to the date of the transaction that
2
3 created the capital gain, and each pass-through
3
4 entity included in the chain of ownership has
4
5 been a member, partner, or shareholder of the
5
6 pass-through entity in the tier immediately below
6
7 it for an uninterrupted period of not less than
7
8 five (5) years.
8
9 (2) With respect to sales of stock or ownership
9
10 interest in or sales of all or substantially all
10
11 of the assets of an Oklahoma company, limited
11
12 liability company, partnership or Oklahoma
12
13 proprietorship business enterprise, the deduction
13
14 described in this subsection shall not apply
14
15 unless the pass-through entity that makes the
15
16 sale has held the stock or ownership interest for
16
17 not less than two (2) uninterrupted years prior
17
18 to the date of the transaction that created the
18
19 capital gain, and each pass-through entity
19
20 included in the chain of ownership has been a
20
21 member, partner or shareholder of the pass-
21
22 through entity in the tier immediately below it
22
23 for an uninterrupted period of not less than two
23
24 (2) years. For purposes of this division,
24
Req. No. 974 Page 84
1 uninterrupted ownership prior to July 1, 2007,
1
2 shall be included in the determination of the
2
3 required holding period prescribed by this
3
4 division, and
4
5 f. "Oklahoma proprietorship business enterprise" means a
5
6 business enterprise whose income and expenses have
6
7 been reported on Schedule C or F of an individual
7
8 taxpayer's federal income tax return, or any similar
8
9 successor schedule published by the Internal Revenue
9
10 Service and whose primary headquarters have been
10
11 located in Oklahoma this state for at least three (3)
11
12 uninterrupted years prior to the date of the
12
13 transaction from which the net capital gains arise.
13
14 G. 1. For purposes of computing its Oklahoma taxable income
14
15 under this section, the dividends-paid deduction otherwise allowed
15
16 by federal law in computing net income of a real estate investment
16
17 trust that is subject to federal income tax shall be added back in
17
18 computing the tax imposed by this state under this title if the real
18
19 estate investment trust is a captive real estate investment trust.
19
20 2. For purposes of computing its Oklahoma taxable income under
20
21 this section, a taxpayer shall add back otherwise deductible rents
21
22 and interest expenses paid to a captive real estate investment trust
22
23 that is not subject to the provisions of paragraph 1 of this
23
24 subsection. As used in this subsection:
24
Req. No. 974 Page 85
1 a. the term "real estate investment trust" or "REIT"
1
2 means the meaning ascribed to such term in Section 856
2
3 of the Internal Revenue Code of 1986, as amended,
3
4 b. the term "captive real estate investment trust" means
4
5 a real estate investment trust, the shares or
5
6 beneficial interests of which are not regularly traded
6
7 on an established securities market and more than
7
8 fifty percent (50%) of the voting power or value of
8
9 the beneficial interests or shares of which are owned
9
10 or controlled, directly or indirectly, or
10
11 constructively, by a single entity that is:
11
12 (1) treated as an association taxable as a
12
13 corporation under the Internal Revenue Code of
13
14 1986, as amended, and
14
15 (2) not exempt from federal income tax pursuant to
15
16 the provisions of Section 501(a) of the Internal
16
17 Revenue Code of 1986, as amended.
17
18 The term shall not include a real estate investment
18
19 trust that is intended to be regularly traded on an
19
20 established securities market, and that satisfies the
20
21 requirements of Section 856(a)(5) and (6) of the U.S.
21
22 Internal Revenue Code of 1986, as amended, by reason
22
23 of Section 856(h)(2) of the Internal Revenue Code of
23
24 1986, as amended,
24
Req. No. 974 Page 86
1 c. the term "association taxable as a corporation" shall
1
2 not include the following entities:
2
3 (1) any real estate investment trust as defined in
3
4 paragraph a of this subsection other than a
4
5 "captive real estate investment trust" captive
5
6 real estate investment trust,
6
7 (2) any qualified real estate investment trust
7
8 subsidiary under Section 856(i) of the Internal
8
9 Revenue Code of 1986, as amended, other than a
9
10 qualified REIT subsidiary of a "captive real
10
11 estate investment trust" captive real estate
11
12 investment trust,
12
13 (3) any Listed Australian Property Trust listed
13
14 Australian property trust (meaning an Australian
14
15 unit trust registered as a "Managed Investment
15
16 Scheme" "managed investment scheme" under the
16
17 Australian Corporations Act 2001 in which the
17
18 principal class of units is listed on a
18
19 recognized stock exchange in Australia and is
19
20 regularly traded on an established securities
20
21 market), or an entity organized as a trust,
21
22 provided that a Listed Australian Property Trust
22
23 listed Australian property trust owns or
23
24 controls, directly or indirectly, seventy-five
24
Req. No. 974 Page 87
1 percent (75%) or more of the voting power or
1
2 value of the beneficial interests or shares of
2
3 such trust, or
3
4 (4) any Qualified Foreign Entity qualified foreign
4
5 entity, meaning a corporation, trust, association
5
6 or partnership organized outside the laws of the
6
7 United States and which satisfies the following
7
8 criteria:
8
9 (a) at least seventy-five percent (75%) of the
9
10 entity's total asset value at the close of
10
11 its taxable year is represented by real
11
12 estate assets, as defined in Section
12
13 856(c)(5)(B) of the Internal Revenue Code of
13
14 1986, as amended, thereby including shares
14
15 or certificates of beneficial interest in
15
16 any real estate investment trust, cash and
16
17 cash equivalents, and U.S. Government
17
18 securities,
18
19 (b) the entity receives a dividend-paid
19
20 deduction comparable to Section 561 of the
20
21 Internal Revenue Code of 1986, as amended,
21
22 or is exempt from entity level tax,
22
23 (c) the entity is required to distribute at
23
24 least eighty-five percent (85%) of its
24
Req. No. 974 Page 88
1 taxable income, as computed in the
1
2 jurisdiction in which it is organized, to
2
3 the holders of its shares or certificates of
3
4 beneficial interest on an annual basis,
4
5 (d) not more than ten percent (10%) of the
5
6 voting power or value in such entity is held
6
7 directly or indirectly or constructively by
7
8 a single entity or individual, or the shares
8
9 or beneficial interests of such entity are
9
10 regularly traded on an established
10
11 securities market, and
11
12 (e) the entity is organized in a country which
12
13 has a tax treaty with the United States.
13
14 3. For purposes of this subsection, the constructive ownership
14
15 rules of Section 318(a) of the Internal Revenue Code, as modified by
15
16 Section 856(d)(5) of the Internal Revenue Code of 1986, as amended,
16
17 shall apply in determining the ownership of stock, assets, or net
17
18 profits of any person.
18
19 4. A real estate investment trust that does not become
19
20 regularly traded on an established securities market within one (1)
20
21 year of the date on which it first becomes a real estate investment
21
22 trust shall be deemed not to have been regularly traded on an
22
23 established securities market, retroactive to the date it first
23
24 became a real estate investment trust, and shall file an amended
24
Req. No. 974 Page 89
1 return reflecting such retroactive designation for any tax year or
1
2 part year occurring during its initial year of status as a real
2
3 estate investment trust. For purposes of this subsection, a real
3
4 estate investment trust becomes a real estate investment trust on
4
5 the first day it has both met the requirements of Section 856 of the
5
6 Internal Revenue Code of 1986, as amended, and has elected to be
6
7 treated as a real estate investment trust pursuant to Section
7
8 856(c)(1) of the Internal Revenue Code of 1986, as amended.
8
9 SECTION 7. AMENDATORY 68 O.S. 2021, Section 5011, is
9
10 amended to read as follows:
10
11 Section 5011. A. Except as otherwise provided by this section,
11
12 beginning with the calendar year 1990 and for each calendar year
12
13 through 1998, and for calendar year 2003, any individual who is a
13
14 resident of and is domiciled in this state during the entire
14
15 calendar year for which the filing is made and whose gross household
15
16 income for such year does not exceed Twelve Thousand Dollars
16
17 ($12,000.00) may file a claim for sales tax relief.
17
18 B. For calendar years 1999, 2002, and 2004, any individual who
18
19 is a resident of and is domiciled in this state during the entire
19
20 calendar year for which the filing is made may file a claim for
20
21 sales tax relief if the gross household income for such year does
21
22 not exceed the following amounts:
22
23 1. For an individual not subject to the provisions of paragraph
23
24 2 of this subsection and claiming no allowable personal exemption
24
Req. No. 974 Page 90
1 other than the allowable personal exemption for that individual or
1
2 the spouse of that individual, Fifteen Thousand Dollars
2
3 ($15,000.00); or
3
4 2. For an individual claiming one or more allowable personal
4
5 exemptions other than the allowable personal exemption for that
5
6 individual or the spouse of that individual, an individual with a
6
7 physical disability constituting a substantial handicap disability
7
8 to employment, or an individual who is sixty-five (65) years of age
8
9 or older at the close of the tax year, Thirty Thousand Dollars
9
10 ($30,000.00).
10
11 C. For calendar years 2000, 2001, 2005 and following and 2005
11
12 through 2024, an individual who is a resident of and is domiciled in
12
13 this state during the entire calendar year for which the filing is
13
14 made may file a claim for sales tax relief if the gross household
14
15 income for such year does not exceed the following amounts:
15
16 1. For an individual not subject to the provisions of paragraph
16
17 2 of this subsection and claiming no allowable personal exemption
17
18 other than the allowable personal exemption for that individual or
18
19 the spouse of that individual, Twenty Thousand Dollars ($20,000.00);
19
20 or
20
21 2. For an individual claiming one or more allowable personal
21
22 exemptions other than the allowable personal exemption for that
22
23 individual or the spouse of that individual, an individual with a
23
24 physical disability constituting a substantial handicap disability
24
Req. No. 974 Page 91
1 to employment, or an individual who is sixty-five (65) years of age
1
2 or older at the close of the tax year, Fifty Thousand Dollars
2
3 ($50,000.00).
3
4 D. The For calendar year 2024 and previous calendar years, the
4
5 amount of the claim filed pursuant to the Sales Tax Relief Act shall
5
6 be Forty Dollars ($40.00) multiplied by the number of allowable
6
7 personal exemptions. No claims for sales tax relief shall be filed
7
8 for calendar year 2025 and subsequent calendar years. As used in
8
9 the Sales Tax Relief Act, "allowable personal exemption" means a
9
10 personal exemption to which the taxpayer would be entitled pursuant
10
11 to the provisions of the Oklahoma Income Tax Act, except for:
11
12 1. The exemptions such taxpayer would be entitled to pursuant
12
13 to Section 2358 of this title if such taxpayer or spouse is blind or
13
14 sixty-five (65) years of age or older at the close of the tax year;
14
15 2. An exemption for a person convicted of a felony if during
15
16 all or any part of the calendar year for which the claim is filed
16
17 such person was an inmate in the custody of the Department of
17
18 Corrections; or
18
19 3. An exemption for a person if during all or any part of the
19
20 calendar year for which the claim is filed such person resided
20
21 outside of this state.
21
22 E. A person convicted of a felony shall not be permitted to
22
23 file a claim for sales tax relief pursuant to the provisions of
23
24 Sections 5010 through 5016 of this title for the period of time
24
Req. No. 974 Page 92
1 during which the person is an inmate in the custody of the
1
2 Department of Corrections. Such period of time shall include the
2
3 entire calendar year if the person is in the custody of the
3
4 Department of Corrections during any part of the calendar year. The
4
5 provisions of this subsection shall not prohibit all other members
5
6 of the household of an inmate from filing a claim based upon the
6
7 personal exemptions to which the household members would be entitled
7
8 pursuant to the provisions of the Oklahoma Income Tax Act.
8
9 F. The Department of Corrections shall withhold up to fifty
9
10 percent (50%) of any money inmates receive for claims made pursuant
10
11 to the Sales Tax Relief Act prior to September 1, 1991, for costs of
11
12 incarceration.
12
13 G. For purposes of Section 139.105 of Title 17 of the Oklahoma
13
14 Statutes, the gross household income of any individual who may file
14
15 a claim for sales tax relief shall not exceed Twelve Thousand
15
16 Dollars ($12,000.00).
16
17 SECTION 8. This act shall become effective July 1, 2025.
17
18 SECTION 9. It being immediately necessary for the preservation
18
19 of the public peace, health or safety, an emergency is hereby
19
20 declared to exist, by reason whereof this act shall take effect and
20
21 be in full force from and after its passage and approval.
21
22
22
23 60-1-974 QD 12/30/2024 4:55:48 PM
23
24
24
Req. No. 974 Page 93Every fact on this page links to its source, starting with the official bill record.