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1 STATE OF OKLAHOMA
1
2 1st Session of the 60th Legislature (2025)
2
3 SENATE BILL 98 By: Howard
3
4
4
5
5
6 AS INTRODUCED
6
7 An Act relating to income tax; amending 68 O.S. 2021,
7 Section 2355, as last amended by Section 1, Chapter
8 27, 1st Extraordinary Session, O.S.L. 2023 (68 O.S.
8 Supp. 2024, Section 2355), which relates to tax
9 imposed on classes of taxpayers; modifying income tax
9 rate for certain tax years; amending 68 O.S. 2021,
10 Section 2358, as last amended by Section 155, Chapter
10 452, O.S.L. 2024 (68 O.S. Supp. 2024, Section 2358),
11 which relates to adjustments; limiting certain
11 personal exemption to certain tax years; modifying
12 amount of standard deduction for certain tax years;
12 updating statutory references; updating statutory
13 language; providing an effective date; and declaring
13 an emergency.
14
14
15
15
16 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
16
17 SECTION 1. AMENDATORY 68 O.S. 2021, Section 2355, as
17
18 last amended by Section 1, Chapter 27, 1st Extraordinary Session,
18
19 O.S.L. 2023 (68 O.S. Supp. 2024, Section 2355), is amended to read
19
20 as follows:
20
21 Section 2355. A. Individuals. For all taxable years beginning
21
22 after December 31, 1998, and before January 1, 2006, a tax is hereby
22
23 imposed upon the Oklahoma taxable income of every resident or
23
24
24
Req. No. 933 Page 1
1 nonresident individual, which tax shall be computed at the option of
1
2 the taxpayer under one of the two following methods:
2
3 1. METHOD 1.
3
4 a. Single individuals and married individuals filing
4
5 separately not deducting federal income tax:
5
6 (1) 1/2% tax on first $1,000.00 or part thereof,
6
7 (2) 1% tax on next $1,500.00 or part thereof,
7
8 (3) 2% tax on next $1,250.00 or part thereof,
8
9 (4) 3% tax on next $1,150.00 or part thereof,
9
10 (5) 4% tax on next $1,300.00 or part thereof,
10
11 (6) 5% tax on next $1,500.00 or part thereof,
11
12 (7) 6% tax on next $2,300.00 or part thereof, and
12
13 (8) (a) for taxable years beginning after December
13
14 31, 1998, and before January 1, 2002, 6.75%
14
15 tax on the remainder,
15
16 (b) for taxable years beginning on or after
16
17 January 1, 2002, and before January 1, 2004,
17
18 7% tax on the remainder, and
18
19 (c) for taxable years beginning on or after
19
20 January 1, 2004, 6.65% tax on the remainder.
20
21 b. Married individuals filing jointly and surviving
21
22 spouse to the extent and in the manner that a
22
23 surviving spouse is permitted to file a joint return
23
24 under the provisions of the Internal Revenue Code of
24
Req. No. 933 Page 2
1 1986, as amended, and heads of households as defined
1
2 in the Internal Revenue Code of 1986, as amended, not
2
3 deducting federal income tax:
3
4 (1) 1/2% tax on first $2,000.00 or part thereof,
4
5 (2) 1% tax on next $3,000.00 or part thereof,
5
6 (3) 2% tax on next $2,500.00 or part thereof,
6
7 (4) 3% tax on next $2,300.00 or part thereof,
7
8 (5) 4% tax on next $2,400.00 or part thereof,
8
9 (6) 5% tax on next $2,800.00 or part thereof,
9
10 (7) 6% tax on next $6,000.00 or part thereof, and
10
11 (8) (a) for taxable years beginning after December
11
12 31, 1998, and before January 1, 2002, 6.75%
12
13 tax on the remainder,
13
14 (b) for taxable years beginning on or after
14
15 January 1, 2002, and before January 1, 2004,
15
16 7% tax on the remainder, and
16
17 (c) for taxable years beginning on or after
17
18 January 1, 2004, 6.65% tax on the remainder.
18
19 2. METHOD 2.
19
20 a. Single individuals and married individuals filing
20
21 separately deducting federal income tax:
21
22 (1) 1/2% tax on first $1,000.00 or part thereof,
22
23 (2) 1% tax on next $1,500.00 or part thereof,
23
24 (3) 2% tax on next $1,250.00 or part thereof,
24
Req. No. 933 Page 3
1 (4) 3% tax on next $1,150.00 or part thereof,
1
2 (5) 4% tax on next $1,200.00 or part thereof,
2
3 (6) 5% tax on next $1,400.00 or part thereof,
3
4 (7) 6% tax on next $1,500.00 or part thereof,
4
5 (8) 7% tax on next $1,500.00 or part thereof,
5
6 (9) 8% tax on next $2,000.00 or part thereof,
6
7 (10) 9% tax on next $3,500.00 or part thereof, and
7
8 (11) 10% tax on the remainder.
8
9 b. Married individuals filing jointly and surviving
9
10 spouse to the extent and in the manner that a
10
11 surviving spouse is permitted to file a joint return
11
12 under the provisions of the Internal Revenue Code of
12
13 1986, as amended, and heads of households as defined
13
14 in the Internal Revenue Code of 1986, as amended,
14
15 deducting federal income tax:
15
16 (1) 1/2% tax on the first $2,000.00 or part thereof,
16
17 (2) 1% tax on the next $3,000.00 or part thereof,
17
18 (3) 2% tax on the next $2,500.00 or part thereof,
18
19 (4) 3% tax on the next $1,400.00 or part thereof,
19
20 (5) 4% tax on the next $1,500.00 or part thereof,
20
21 (6) 5% tax on the next $1,600.00 or part thereof,
21
22 (7) 6% tax on the next $1,250.00 or part thereof,
22
23 (8) 7% tax on the next $1,750.00 or part thereof,
23
24 (9) 8% tax on the next $3,000.00 or part thereof,
24
Req. No. 933 Page 4
1 (10) 9% tax on the next $6,000.00 or part thereof, and
1
2 (11) 10% tax on the remainder.
2
3 B. Individuals. For all taxable years beginning on or after
3
4 January 1, 2008, and ending any tax year which begins after December
4
5 31, 2015, for which the determination required pursuant to Sections
5
6 4 2355.1F and 5 2355.1G of this act title is made by the State Board
6
7 of Equalization, a tax is hereby imposed upon the Oklahoma taxable
7
8 income of every resident or nonresident individual, which tax shall
8
9 be computed as follows:
9
10 1. Single individuals and married individuals filing
10
11 separately:
11
12 (a) 1/2% tax on first $1,000.00 or part thereof,
12
13 (b) 1% tax on next $1,500.00 or part thereof,
13
14 (c) 2% tax on next $1,250.00 or part thereof,
14
15 (d) 3% tax on next $1,150.00 or part thereof,
15
16 (e) 4% tax on next $2,300.00 or part thereof,
16
17 (f) 5% tax on next $1,500.00 or part thereof,
17
18 (g) 5.50% tax on the remainder for the 2008 tax year and
18
19 any subsequent tax year unless the rate prescribed by
19
20 subparagraph (h) of this paragraph is in effect, and
20
21 (h) 5.25% tax on the remainder for the 2009 and subsequent
21
22 tax years. The decrease in the top marginal
22
23 individual income tax rate otherwise authorized by
23
24 this subparagraph shall be contingent upon the
24
Req. No. 933 Page 5
1 determination required to be made by the State Board
1
2 of Equalization pursuant to Section 2355.1A of this
2
3 title.
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) 1/2% tax on first $2,000.00 or part thereof,
9
10 (b) 1% tax on next $3,000.00 or part thereof,
10
11 (c) 2% tax on next $2,500.00 or part thereof,
11
12 (d) 3% tax on next $2,300.00 or part thereof,
12
13 (e) 4% tax on next $2,400.00 or part thereof,
13
14 (f) 5% tax on next $2,800.00 or part thereof,
14
15 (g) 5.50% tax on the remainder for the 2008 tax year and
15
16 any subsequent tax year unless the rate prescribed by
16
17 subparagraph (h) of this paragraph is in effect, and
17
18 (h) 5.25% tax on the remainder for the 2009 and subsequent
18
19 tax years. The decrease in the top marginal
19
20 individual income tax rate otherwise authorized by
20
21 this subparagraph shall be contingent upon the
21
22 determination required to be made by the State Board
22
23 of Equalization pursuant to Section 2355.1A of this
23
24 title.
24
Req. No. 933 Page 6
1 C. Individuals. For all taxable years beginning on or after
1
2 January 1, 2024 tax year 2024, a tax is hereby imposed upon the
2
3 Oklahoma taxable income of every resident or nonresident individual,
3
4 which tax shall be computed as follows:
4
5 1. Single individuals and married individuals filing
5
6 separately:
6
7 (a) 0.25% tax on first $1,000.00 or part thereof,
7
8 (b) 0.75% tax on next $1,500.00 or part thereof,
8
9 (c) 1.75% tax on next $1,250.00 or part thereof,
9
10 (d) 2.75% tax on next $1,150.00 or part thereof,
10
11 (e) 3.75% tax on next $2,300.00 or part thereof, and
11
12 (f) 4.75% tax on the remainder.
12
13 2. Married individuals filing jointly and surviving spouse to
13
14 the extent and in the manner that a surviving spouse is permitted to
14
15 file a joint return under the provisions of the Internal Revenue
15
16 Code of 1986, as amended, and heads of households as defined in the
16
17 Internal Revenue Code of 1986, as amended:
17
18 (a) 0.25% tax on first $2,000.00 or part thereof,
18
19 (b) 0.75% tax on next $3,000.00 or part thereof,
19
20 (c) 1.75% tax on next $2,500.00 or part thereof,
20
21 (d) 2.75% tax on next $2,300.00 or part thereof,
21
22 (e) 3.75% tax on next $4,600.00 or part thereof, and
22
23 (f) 4.75% tax on the remainder.
23
24
24
Req. No. 933 Page 7
1 No deduction for federal income taxes paid shall be allowed to
1
2 any taxpayer to arrive at taxable income.
2
3 D. For tax year 2025 and subsequent tax years, a tax is hereby
3
4 imposed upon the Oklahoma taxable income of every resident or
4
5 nonresident individual, which tax shall be four and seventy-five
5
6 hundredths percent (4.75%). No deduction for federal income taxes
6
7 paid shall be allowed to any taxpayer to arrive at taxable income.
7
8 E. Nonresident aliens. In lieu of the rates set forth in
8
9 subsection A above, there shall be imposed on nonresident aliens, as
9
10 defined in the Internal Revenue Code of 1986, as amended, a tax of
10
11 eight percent (8%) instead of thirty percent (30%) as used in the
11
12 Internal Revenue Code of 1986, as amended, with respect to the
12
13 Oklahoma taxable income of such nonresident aliens as determined
13
14 under the provision of the Oklahoma Income 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 eight percent (8%) 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 Oklahoma Tax Commission, and shall file a return with each such
21
22 payment. Such return shall be in such form as the Tax Commission
22
23 shall prescribe. Every payer required under this subsection to
23
24 deduct and withhold a tax from a payee shall, as to the total
24
Req. No. 933 Page 8
1 amounts paid to each payee during the calendar year, furnish to such
1
2 payee, on or before January 31, of the succeeding year, a written
2
3 statement showing the name of the payer, the name of the payee and
3
4 the payee's Social Security account number, if any, the total amount
4
5 paid subject to taxation, and the total amount deducted and withheld
5
6 as tax and such other information as the Tax Commission may require.
6
7 Any payer who fails to withhold or pay to the Tax Commission any
7
8 sums herein required to be withheld or paid shall be personally and
8
9 individually liable therefor to the State of Oklahoma.
9
10 E. F. Corporations. For all taxable years beginning after
10
11 December 31, 2021, a tax is hereby imposed upon the Oklahoma taxable
11
12 income of every corporation doing business within this state or
12
13 deriving income from sources within this state in an amount equal to
13
14 four percent (4%) thereof.
14
15 There shall be no additional Oklahoma income tax imposed on
15
16 accumulated taxable income or on undistributed personal holding
16
17 company income as those terms are defined in the Internal Revenue
17
18 Code of 1986, as amended.
18
19 F. G. Certain foreign corporations. In lieu of the tax imposed
19
20 in the first paragraph of subsection D F of this section, for all
20
21 taxable years beginning after December 31, 2021, there shall be
21
22 imposed on foreign corporations, as defined in the Internal Revenue
22
23 Code of 1986, as amended, a tax of four percent (4%) instead of
23
24 thirty percent (30%) as used in the Internal Revenue Code of 1986,
24
Req. No. 933 Page 9
1 as amended, where such income is received from sources within
1
2 Oklahoma this state, in accordance with the provisions of the
2
3 Internal Revenue Code of 1986, as amended, and the Oklahoma Income
3
4 Tax Act.
4
5 Every payer of amounts covered by this subsection shall deduct
5
6 and withhold from such amounts paid each payee an amount equal to
6
7 four percent (4%) thereof. Every payer required to deduct and
7
8 withhold taxes under this subsection shall for each quarterly period
8
9 on or before the last day of the month following the close of each
9
10 such quarterly period, pay over the amount so withheld as taxes to
10
11 the Tax Commission, and shall file a return with each such payment.
11
12 Such return shall be in such form as the Tax Commission shall
12
13 prescribe. Every payer required under this subsection to deduct and
13
14 withhold a tax from a payee shall, as to the total amounts paid to
14
15 each payee during the calendar year, furnish to such payee, on or
15
16 before January 31, of the succeeding year, a written statement
16
17 showing the name of the payer, the name of the payee and the payee's
17
18 Social Security account number, if any, the total amounts paid
18
19 subject to taxation, the total amount deducted and withheld as tax,
19
20 and such other information as the Tax Commission may require. Any
20
21 payer who fails to withhold or pay to the Tax Commission any sums
21
22 herein required to be withheld or paid shall be personally and
22
23 individually liable therefor to the State of Oklahoma.
23
24
24
Req. No. 933 Page 10
1 G. H. Fiduciaries. A tax is hereby imposed upon the Oklahoma
1
2 taxable income of every trust and estate at the same rates as are
2
3 provided in subsection B or C subsections B through D of this
3
4 section for single individuals. Fiduciaries are not allowed a
4
5 deduction for any federal income tax paid.
5
6 H. I. Tax rate tables. For all taxable years beginning after
6
7 December 31, 1991, in lieu of the tax imposed by subsection A, B or
7
8 C subsections A through D of this section, as applicable there is
8
9 hereby imposed for each taxable year on the taxable income of every
9
10 individual, whose taxable income for such taxable year does not
10
11 exceed the ceiling amount, a tax determined under tables, applicable
11
12 to such taxable year which shall be prescribed by the Tax Commission
12
13 and which shall be in such form as it determines appropriate. In
13
14 the table so prescribed, the amounts of the tax shall be computed on
14
15 the basis of the rates prescribed by subsection A, B or C
15
16 subsections A through D of this section. For purposes of this
16
17 subsection, the term "ceiling amount" means, with respect to any
17
18 taxpayer, the amount determined by the Tax Commission for the tax
18
19 rate category in which such taxpayer falls.
19
20 SECTION 2. AMENDATORY 68 O.S. 2021, Section 2358, as
20
21 last amended by Section 155, Chapter 452, O.S.L. 2024 (68 O.S. Supp.
21
22 2024, Section 2358), is amended to read as follows:
22
23 Section 2358. For all tax years beginning after December 31,
23
24 1981, taxable income and adjusted gross income shall be adjusted to
24
Req. No. 933 Page 11
1 arrive at Oklahoma taxable income and Oklahoma adjusted gross income
1
2 as required by this section.
2
3 A. The taxable income of any taxpayer shall be adjusted to
3
4 arrive at Oklahoma taxable income for corporations and Oklahoma
4
5 adjusted gross income for individuals, as follows:
5
6 1. There shall be added interest income on obligations of any
6
7 state or political subdivision thereto which is not otherwise
7
8 exempted pursuant to other laws of this state, to the extent that
8
9 such interest is not included in taxable income and adjusted gross
9
10 income.
10
11 2. There shall be deducted amounts included in such income that
11
12 the state is prohibited from taxing because of the provisions of the
12
13 Federal United States Constitution, the State Oklahoma Constitution,
13
14 federal laws or laws of Oklahoma.
14
15 3. The amount of any federal net operating loss deduction shall
15
16 be adjusted as follows:
16
17 a. For carryovers and carrybacks to taxable years
17
18 beginning before January 1, 1981, the amount of any
18
19 net operating loss deduction allowed to a taxpayer for
19
20 federal income tax purposes shall be reduced to an
20
21 amount which is the same portion thereof as the loss
21
22 from sources within this state, as determined pursuant
22
23 to this section and Section 2362 of this title, for
23
24
24
Req. No. 933 Page 12
1 the taxable year in which such loss is sustained is of
1
2 the total loss for such year;
2
3 b. For carryovers and carrybacks to taxable years
3
4 beginning after December 31, 1980, the amount of any
4
5 net operating loss deduction allowed for the taxable
5
6 year shall be an amount equal to the aggregate of the
6
7 Oklahoma net operating loss carryovers and carrybacks
7
8 to such year. Oklahoma net operating losses shall be
8
9 separately determined by reference to Section 172 of
9
10 the Internal Revenue Code of 1986, as amended, 26
10
11 U.S.C., Section 172, as modified by the Oklahoma
11
12 Income Tax Act, Section 2351 et seq. of this title,
12
13 and shall be allowed without regard to the existence
13
14 of a federal net operating loss. For tax years
14
15 beginning after December 31, 2000, and ending before
15
16 January 1, 2008, the years to which such losses may be
16
17 carried shall be determined solely by reference to
17
18 Section 172 of the Internal Revenue Code of 1986, as
18
19 amended, 26 U.S.C., Section 172, with the exception
19
20 that the terms "net operating loss" and "taxable
20
21 income" shall be replaced with "Oklahoma net operating
21
22 loss" and "Oklahoma taxable income". For tax years
22
23 beginning after December 31, 2007, and ending before
23
24 January 1, 2009, years to which such losses may be
24
Req. No. 933 Page 13
1 carried back shall be limited to two (2) years. For
1
2 tax years beginning after December 31, 2008, the years
2
3 to which such losses may be carried back shall be
3
4 determined solely by reference to Section 172 of the
4
5 Internal Revenue Code of 1986, as amended, 26 U.S.C.,
5
6 Section 172, with the exception that the terms "net
6
7 operating loss" and "taxable income" shall be replaced
7
8 with "Oklahoma net operating loss" and "Oklahoma
8
9 taxable income".
9
10 4. Items of the following nature shall be allocated as
10
11 indicated. Allowable deductions attributable to items separately
11
12 allocable in subparagraphs a, b and c of this paragraph, whether or
12
13 not such items of income were actually received, shall be allocated
13
14 on the same basis as those items:
14
15 a. Income from real and tangible personal property, such
15
16 as rents, oil and mining production or royalties, and
16
17 gains or losses from sales of such property, shall be
17
18 allocated in accordance with the situs of such
18
19 property;
19
20 b. Income from intangible personal property, such as
20
21 interest, dividends, patent or copyright royalties,
21
22 and gains or losses from sales of such property, shall
22
23 be allocated in accordance with the domiciliary situs
23
24 of the taxpayer, except that:
24
Req. No. 933 Page 14
1 (1) where such property has acquired a nonunitary
1
2 business or commercial situs apart from the
2
3 domicile of the taxpayer such income shall be
3
4 allocated in accordance with such business or
4
5 commercial situs; interest income from
5
6 investments held to generate working capital for
6
7 a unitary business enterprise shall be included
7
8 in apportionable income; a resident trust or
8
9 resident estate shall be treated as having a
9
10 separate commercial or business situs insofar as
10
11 undistributed income is concerned, but shall not
11
12 be treated as having a separate commercial or
12
13 business situs insofar as distributed income is
13
14 concerned,
14
15 (2) for taxable years beginning after December 31,
15
16 2003, capital or ordinary gains or losses from
16
17 the sale of an ownership interest in a publicly
17
18 traded partnership, as defined by Section 7704(b)
18
19 of the Internal Revenue Code of 1986, as amended,
19
20 shall be allocated to this state in the ratio of
20
21 the original cost of such partnership's tangible
21
22 property in this state to the original cost of
22
23 such partnership's tangible property everywhere,
23
24 as determined at the time of the sale; if more
24
Req. No. 933 Page 15
1 than fifty percent (50%) of the value of the
1
2 partnership's assets consists of intangible
2
3 assets, capital or ordinary gains or losses from
3
4 the sale of an ownership interest in the
4
5 partnership shall be allocated to this state in
5
6 accordance with the sales factor of the
6
7 partnership for its first full tax period
7
8 immediately preceding its tax period during which
8
9 the ownership interest in the partnership was
9
10 sold; the provisions of this division shall only
10
11 apply if the capital or ordinary gains or losses
11
12 from the sale of an ownership interest in a
12
13 partnership do not constitute qualifying gain
13
14 receiving capital treatment as defined in
14
15 subparagraph a of paragraph 2 of subsection F of
15
16 this section,
16
17 (3) income from such property which is required to be
17
18 allocated pursuant to the provisions of paragraph
18
19 5 of this subsection shall be allocated as herein
19
20 provided;
20
21 c. Net income or loss from a business activity which is
21
22 not a part of business carried on within or without
22
23 the state of a unitary character shall be separately
23
24
24
Req. No. 933 Page 16
1 allocated to the state in which such activity is
1
2 conducted;
2
3 d. In the case of a manufacturing or processing
3
4 enterprise the business of which in Oklahoma this
4
5 state consists solely of marketing its products by:
5
6 (1) sales having a situs without this state, shipped
6
7 directly to a point from without the state to a
7
8 purchaser within the state, commonly known as
8
9 interstate sales,
9
10 (2) sales of the product stored in public warehouses
10
11 within the state pursuant to "in transit"
11
12 tariffs, as prescribed and allowed by the
12
13 Interstate Commerce Commission, to a purchaser
13
14 within the state,
14
15 (3) sales of the product stored in public warehouses
15
16 within the state where the shipment to such
16
17 warehouses is not covered by "in transit"
17
18 tariffs, as prescribed and allowed by the
18
19 Interstate Commerce Commission, to a purchaser
19
20 within or without the state,
20
21 the Oklahoma net income shall, at the option of the
21
22 taxpayer, be that portion of the total net income of
22
23 the taxpayer for federal income tax purposes derived
23
24 from the manufacture and/or processing and sales
24
Req. No. 933 Page 17
1 everywhere as determined by the ratio of the sales
1
2 defined in this section made to the purchaser within
2
3 the state to the total sales everywhere. The term
3
4 "public warehouse" as used in this subparagraph means
4
5 a licensed public warehouse, the principal business of
5
6 which is warehousing merchandise for the public;
6
7 e. In the case of insurance companies, Oklahoma taxable
7
8 income shall be taxable income of the taxpayer for
8
9 federal tax purposes, as adjusted for the adjustments
9
10 provided pursuant to the provisions of paragraphs 1
10
11 and 2 of this subsection, apportioned as follows:
11
12 (1) except as otherwise provided by division (2) of
12
13 this subparagraph, taxable income of an insurance
13
14 company for a taxable year shall be apportioned
14
15 to this state by multiplying such income by a
15
16 fraction, the numerator of which is the direct
16
17 premiums written for insurance on property or
17
18 risks in this state, and the denominator of which
18
19 is the direct premiums written for insurance on
19
20 property or risks everywhere. For purposes of
20
21 this subsection, the term "direct premiums
21
22 written" means the total amount of direct
22
23 premiums written, assessments and annuity
23
24 considerations as reported for the taxable year
24
Req. No. 933 Page 18
1 on the annual statement filed by the company with
1
2 the Insurance Commissioner in the form approved
2
3 by the National Association of Insurance
3
4 Commissioners, or such other form as may be
4
5 prescribed in lieu thereof,
5
6 (2) if the principal source of premiums written by an
6
7 insurance company consists of premiums for
7
8 reinsurance accepted by it, the taxable income of
8
9 such company shall be apportioned to this state
9
10 by multiplying such income by a fraction, the
10
11 numerator of which is the sum of (a) direct
11
12 premiums written for insurance on property or
12
13 risks in this state, plus (b) premiums written
13
14 for reinsurance accepted in respect of property
14
15 or risks in this state, and the denominator of
15
16 which is the sum of (c) direct premiums written
16
17 for insurance on property or risks everywhere,
17
18 plus (d) premiums written for reinsurance
18
19 accepted in respect of property or risks
19
20 everywhere. For purposes of this paragraph,
20
21 premiums written for reinsurance accepted in
21
22 respect of property or risks in this state,
22
23 whether or not otherwise determinable, may at the
23
24 election of the company be determined on the
24
Req. No. 933 Page 19
1 basis of the proportion which premiums written
1
2 for insurance accepted from companies
2
3 commercially domiciled in Oklahoma this state
3
4 bears to premiums written for reinsurance
4
5 accepted from all sources, or alternatively in
5
6 the proportion which the sum of the direct
6
7 premiums written for insurance on property or
7
8 risks in this state by each ceding company from
8
9 which reinsurance is accepted bears to the sum of
9
10 the total direct premiums written by each such
10
11 ceding company for the taxable year.
11
12 5. The net income or loss remaining after the separate
12
13 allocation in paragraph 4 of this subsection, being that which is
13
14 derived from a unitary business enterprise, shall be apportioned to
14
15 this state on the basis of the arithmetical average of three factors
15
16 consisting of property, payroll and sales or gross revenue
16
17 enumerated as subparagraphs a, b and c of this paragraph. Net
17
18 income or loss as used in this paragraph includes that derived from
18
19 patent or copyright royalties, purchase discounts, and interest on
19
20 accounts receivable relating to or arising from a business activity,
20
21 the income from which is apportioned pursuant to this subsection,
21
22 including the sale or other disposition of such property and any
22
23 other property used in the unitary enterprise. Deductions used in
23
24 computing such net income or loss shall not include taxes based on
24
Req. No. 933 Page 20
1 or measured by income. Provided, for corporations whose property
1
2 for purposes of the tax imposed by Section 2355 of this title has an
2
3 initial investment cost equaling or exceeding Two Hundred Million
3
4 Dollars ($200,000,000.00) and such investment is made on or after
4
5 July 1, 1997, or for corporations which expand their property or
5
6 facilities in this state and such expansion has an investment cost
6
7 equaling or exceeding Two Hundred Million Dollars ($200,000,000.00)
7
8 over a period not to exceed three (3) years, and such expansion is
8
9 commenced on or after January 1, 2000, the three factors shall be
9
10 apportioned with property and payroll, each comprising twenty-five
10
11 percent (25%) of the apportionment factor and sales comprising fifty
11
12 percent (50%) of the apportionment factor. The apportionment
12
13 factors shall be computed as follows:
13
14 a. The property factor is a fraction, the numerator of
14
15 which is the average value of the taxpayer's real and
15
16 tangible personal property owned or rented and used in
16
17 this state during the tax period and the denominator
17
18 of which is the average value of all the taxpayer's
18
19 real and tangible personal property everywhere owned
19
20 or rented and used during the tax period.
20
21 (1) Property, the income from which is separately
21
22 allocated in paragraph 4 of this subsection,
22
23 shall not be included in determining this
23
24 fraction. The numerator of the fraction shall
24
Req. No. 933 Page 21
1 include a portion of the investment in
1
2 transportation and other equipment having no
2
3 fixed situs, such as rolling stock, buses, trucks
3
4 and trailers, including machinery and equipment
4
5 carried thereon, airplanes, salespersons'
5
6 automobiles and other similar equipment, in the
6
7 proportion that miles traveled in Oklahoma this
7
8 state by such equipment bears to total miles
8
9 traveled,
9
10 (2) Property owned by the taxpayer is valued at its
10
11 original cost. Property rented by the taxpayer
11
12 is valued at eight times the net annual rental
12
13 rate. Net annual rental rate is the annual
13
14 rental rate paid by the taxpayer, less any annual
14
15 rental rate received by the taxpayer from
15
16 subrentals,
16
17 (3) The average value of property shall be determined
17
18 by averaging the values at the beginning and
18
19 ending of the tax period but the Oklahoma Tax
19
20 Commission may require the averaging of monthly
20
21 values during the tax period if reasonably
21
22 required to reflect properly the average value of
22
23 the taxpayer's property;
23
24
24
Req. No. 933 Page 22
1 b. The payroll factor is a fraction, the numerator of
1
2 which is the total compensation for services rendered
2
3 in the state during the tax period, and the
3
4 denominator of which is the total compensation for
4
5 services rendered everywhere during the tax period.
5
6 "Compensation", as used in this subsection, means
6
7 those paid-for services to the extent related to the
7
8 unitary business but does not include officers'
8
9 salaries, wages and other compensation.
9
10 (1) In the case of a transportation enterprise, the
10
11 numerator of the fraction shall include a portion
11
12 of such expenditure in connection with employees
12
13 operating equipment over a fixed route, such as
13
14 railroad employees, airline pilots, or bus
14
15 drivers, in this state only a part of the time,
15
16 in the proportion that mileage traveled in
16
17 Oklahoma this state bears to total mileage
17
18 traveled by such employees,
18
19 (2) In any case the numerator of the fraction shall
19
20 include a portion of such expenditures in
20
21 connection with itinerant employees, such as
21
22 traveling salespersons, in this state only a part
22
23 of the time, in the proportion that time spent in
23
24
24
Req. No. 933 Page 23
1 Oklahoma this state bears to total time spent in
1
2 furtherance of the enterprise by such employees;
2
3 c. The sales factor is a fraction, the numerator of which
3
4 is the total sales or gross revenue of the taxpayer in
4
5 this state during the tax period, and the denominator
5
6 of which is the total sales or gross revenue of the
6
7 taxpayer everywhere during the tax period. "Sales",
7
8 as used in this subsection, does not include sales or
8
9 gross revenue which are separately allocated in
9
10 paragraph 4 of this subsection.
10
11 (1) Sales of tangible personal property have a situs
11
12 in this state if the property is delivered or
12
13 shipped to a purchaser other than the United
13
14 States government, within this state regardless
14
15 of the FOB Freight on Board (FOB) point or other
15
16 conditions of the sale; or the property is
16
17 shipped from an office, store, warehouse, factory
17
18 or other place of storage in this state and (a)
18
19 the purchaser is the United States government or
19
20 (b) the taxpayer is not doing business in the
20
21 state of the destination of the shipment.
21
22 (2) In the case of a railroad or interurban railway
22
23 enterprise, the numerator of the fraction shall
23
24 not be less than the allocation of revenues to
24
Req. No. 933 Page 24
1 this state as shown in its annual report to the
1
2 Corporation Commission.
2
3 (3) In the case of an airline, truck or bus
3
4 enterprise or freight car, tank car, refrigerator
4
5 car or other railroad equipment enterprise, the
5
6 numerator of the fraction shall include a portion
6
7 of revenue from interstate transportation in the
7
8 proportion that interstate mileage traveled in
8
9 Oklahoma this state bears to total interstate
9
10 mileage traveled.
10
11 (4) In the case of an oil, gasoline or gas pipeline
11
12 enterprise, the numerator of the fraction shall
12
13 be either the total of traffic units of the
13
14 enterprise within Oklahoma this state or the
14
15 revenue allocated to Oklahoma this state based
15
16 upon miles moved, at the option of the taxpayer,
16
17 and the denominator of which shall be the total
17
18 of traffic units of the enterprise or the revenue
18
19 of the enterprise everywhere as appropriate to
19
20 the numerator. A "traffic unit" is hereby
20
21 defined as the transportation for a distance of
21
22 one (1) mile of one (1) barrel of oil, one (1)
22
23 gallon of gasoline or one thousand (1,000) cubic
23
24
24
Req. No. 933 Page 25
1 feet of natural or casinghead gas, as the case
1
2 may be.
2
3 (5) In the case of a telephone or telegraph or other
3
4 communication enterprise, the numerator of the
4
5 fraction shall include that portion of the
5
6 interstate revenue as is allocated pursuant to
6
7 the accounting procedures prescribed by the
7
8 Federal Communications Commission; provided that
8
9 in respect to each corporation or business entity
9
10 required by the Federal Communications Commission
10
11 to keep its books and records in accordance with
11
12 a uniform system of accounts prescribed by such
12
13 Commission, the intrastate net income shall be
13
14 determined separately in the manner provided by
14
15 such uniform system of accounts and only the
15
16 interstate income shall be subject to allocation
16
17 pursuant to the provisions of this subsection.
17
18 Provided further, that the gross revenue factors
18
19 shall be those as are determined pursuant to the
19
20 accounting procedures prescribed by the Federal
20
21 Communications Commission.
21
22 In any case where the apportionment of the three factors
22
23 prescribed in this paragraph attributes to Oklahoma this state a
23
24 portion of net income of the enterprise out of all appropriate
24
Req. No. 933 Page 26
1 proportion to the property owned and/or business transacted within
1
2 this state, because of the fact that one or more of the factors so
2
3 prescribed are not employed to any appreciable extent in furtherance
3
4 of the enterprise; or because one or more factors not so prescribed
4
5 are employed to a considerable extent in furtherance of the
5
6 enterprise; or because of other reasons, the Tax Commission is
6
7 empowered to permit, after a showing by taxpayer that an excessive
7
8 portion of net income has been attributed to Oklahoma this state, or
8
9 require, when in its judgment an insufficient portion of net income
9
10 has been attributed to Oklahoma this state, the elimination,
10
11 substitution, or use of additional factors, or reduction or increase
11
12 in the weight of such prescribed factors. Provided, however, that
12
13 any such variance from such prescribed factors which has the effect
13
14 of increasing the portion of net income attributable to Oklahoma
14
15 this state must not be inherently arbitrary, and application of the
15
16 recomputed final apportionment to the net income of the enterprise
16
17 must attribute to Oklahoma this state only a reasonable portion
17
18 thereof.
18
19 6. For calendar years 1997 and 1998, the owner of a new or
19
20 expanded agricultural commodity processing facility in this state
20
21 may exclude from Oklahoma taxable income, or in the case of an
21
22 individual, the Oklahoma adjusted gross income, fifteen percent
22
23 (15%) of the investment by the owner in the new or expanded
23
24 agricultural commodity processing facility. For calendar year 1999,
24
Req. No. 933 Page 27
1 and all subsequent years, the percentage, not to exceed fifteen
1
2 percent (15%), available to the owner of a new or expanded
2
3 agricultural commodity processing facility in this state claiming
3
4 the exemption shall be adjusted annually so that the total estimated
4
5 reduction in tax liability does not exceed One Million Dollars
5
6 ($1,000,000.00) annually. The Tax Commission shall promulgate rules
6
7 for determining the percentage of the investment which each eligible
7
8 taxpayer may exclude. The exclusion provided by this paragraph
8
9 shall be taken in the taxable year when the investment is made. In
9
10 the event the total reduction in tax liability authorized by this
10
11 paragraph exceeds One Million Dollars ($1,000,000.00) in any
11
12 calendar year, the Tax Commission shall permit any excess over One
12
13 Million Dollars ($1,000,000.00) and shall factor such excess into
13
14 the percentage for subsequent years. Any amount of the exemption
14
15 permitted to be excluded pursuant to the provisions of this
15
16 paragraph but not used in any year may be carried forward as an
16
17 exemption from income pursuant to the provisions of this paragraph
17
18 for a period not exceeding six (6) years following the year in which
18
19 the investment was originally made.
19
20 For purposes of this paragraph:
20
21 a. "Agricultural commodity processing facility" means
21
22 building buildings, structures, fixtures and
22
23 improvements used or operated primarily for the
23
24 processing or production of marketable products from
24
Req. No. 933 Page 28
1 agricultural commodities. The term shall also mean a
1
2 dairy operation that requires a depreciable investment
2
3 of at least Two Hundred Fifty Thousand Dollars
3
4 ($250,000.00) and which produces milk from dairy cows.
4
5 The term does not include a facility that provides
5
6 only, and nothing more than, storage, cleaning, drying
6
7 or transportation of agricultural commodities, and
7
8 b. "Facility" means each part of the facility which is
8
9 used in a process primarily for:
9
10 (1) the processing of agricultural commodities,
10
11 including receiving or storing agricultural
11
12 commodities, or the production of milk at a dairy
12
13 operation,
13
14 (2) transporting the agricultural commodities or
14
15 product before, during or after the processing,
15
16 or
16
17 (3) packaging or otherwise preparing the product for
17
18 sale or shipment.
18
19 7. Despite any provision to the contrary in paragraph 3 of this
19
20 subsection, for taxable years beginning after December 31, 1999, in
20
21 the case of a taxpayer which has a farming loss, such farming loss
21
22 shall be considered a net operating loss carryback in accordance
22
23 with and to the extent of the Internal Revenue Code of 1986, as
23
24 amended, 26 U.S.C., Section 172(b)(G) 172(b)(1)(B). However, the
24
Req. No. 933 Page 29
1 amount of the net operating loss carryback shall not exceed the
1
2 lesser of:
2
3 a. Sixty Thousand Dollars ($60,000.00), or
3
4 b. the loss properly shown on Schedule F of the Internal
4
5 Revenue Service Form 1040 reduced by one-half (1/2) of
5
6 the income from all other sources other than reflected
6
7 on Schedule F.
7
8 8. In taxable years beginning after December 31, 1995, all
8
9 qualified wages equal to the federal income tax credit set forth in
9
10 26 U.S.C.A., Section 45A, shall be deducted from taxable income.
10
11 The deduction allowed pursuant to this paragraph shall only be
11
12 permitted for the tax years in which the federal tax credit pursuant
12
13 to 26 U.S.C.A., Section 45A, is allowed. For purposes of this
13
14 paragraph, "qualified wages" means those wages used to calculate the
14
15 federal credit pursuant to 26 U.S.C.A., Section 45A.
15
16 9. In taxable years beginning after December 31, 2005, an
16
17 employer that is eligible for and utilizes the Safety Pays OSHA
17
18 Consultation Service provided by the Oklahoma Department of Labor
18
19 shall receive an exemption from taxable income in the amount of One
19
20 Thousand Dollars ($1,000.00) for the tax year that the service is
20
21 utilized.
21
22 10. For taxable years beginning on or after January 1, 2010,
22
23 there shall be added to Oklahoma taxable income an amount equal to
23
24 the amount of deferred income not included in such taxable income
24
Req. No. 933 Page 30
1 pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986
1
2 as amended by Section 1231 of the American Recovery and Reinvestment
2
3 Act of 2009 (P.L. No. 111-5). There shall be subtracted from
3
4 Oklahoma taxable income an amount equal to the amount of deferred
4
5 income included in such taxable income pursuant to Section 108(i)(1)
5
6 of the Internal Revenue Code of 1986 as amended by Section 1231 of
6
7 the American Recovery and Reinvestment Act of 2009 (P.L. No. 111-5).
7
8 11. For taxable years beginning on or after January 1, 2019,
8
9 there shall be subtracted from Oklahoma taxable income or adjusted
9
10 gross income any item of income or gain, and there shall be added to
10
11 Oklahoma taxable income or adjusted gross income any item of loss or
11
12 deduction that in the absence of an election pursuant to the
12
13 provisions of the Pass-Through Entity Tax Equity Act of 2019 would
13
14 be allocated to a member or to an indirect member of an electing
14
15 pass-through entity pursuant to Section 2351 et seq. of this title,
15
16 if (i) the electing pass-through entity has accounted for such item
16
17 in computing its Oklahoma net entity income or loss pursuant to the
17
18 provisions of the Pass-Through Entity Tax Equity Act of 2019, and
18
19 (ii) the total amount of tax attributable to any resulting Oklahoma
19
20 net entity income has been paid. The Oklahoma Tax Commission shall
20
21 promulgate rules for the reporting of such exclusion to direct and
21
22 indirect members of the electing pass-through entity. As used in
22
23 this paragraph, "electing pass-through entity", "indirect member",
23
24 and "member" shall be defined in the same manner as prescribed by
24
Req. No. 933 Page 31
1 Section 2355.1P-2 of this title. Notwithstanding the application of
1
2 this paragraph, the adjusted tax basis of any ownership interest in
2
3 a pass-through entity for purposes of Section 2351 et seq. of this
3
4 title shall be equal to its adjusted tax basis for federal income
4
5 tax purposes.
5
6 B. 1. The taxable income of any corporation shall be further
6
7 adjusted to arrive at Oklahoma taxable income, except those
7
8 corporations electing treatment as provided in subchapter S of the
8
9 Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 1361
9
10 et seq., and Section 2365 of this title, deductions pursuant to the
10
11 provisions of the Accelerated Cost Recovery System as defined
11
12 provided and allowed in the Economic Recovery Tax Act of 1981,
12
13 Public Law 97-34, 26 U.S.C., Section 168, for depreciation of assets
13
14 placed into service after December 31, 1981, shall not be allowed in
14
15 calculating Oklahoma taxable income. Such corporations shall be
15
16 allowed a deduction for depreciation of assets placed into service
16
17 after December 31, 1981, in accordance with provisions of the
17
18 Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 1 et
18
19 seq., in effect immediately prior to the enactment of the
19
20 Accelerated Cost Recovery System. The Oklahoma tax basis for all
20
21 such assets placed into service after December 31, 1981, calculated
21
22 in this section shall be retained and utilized for all Oklahoma
22
23 income tax purposes through the final disposition of such assets.
23
24
24
Req. No. 933 Page 32
1 Notwithstanding any other provisions of the Oklahoma Income Tax
1
2 Act, Section 2351 et seq. of this title, or of the Internal Revenue
2
3 Code of 1986, as amended, to the contrary, this subsection shall
3
4 control calculation of depreciation of assets placed into service
4
5 after December 31, 1981, and before January 1, 1983.
5
6 For assets placed in service and held by a corporation in which
6
7 accelerated cost recovery system the Accelerated Cost Recovery
7
8 System was previously disallowed, an adjustment to taxable income is
8
9 required in the first taxable year beginning after December 31,
9
10 1982, to reconcile the basis of such assets to the basis allowed in
10
11 the Internal Revenue Code of 1986, as amended. The purpose of this
11
12 adjustment is to equalize the basis and allowance for depreciation
12
13 accounts between that reported to the Internal Revenue Service and
13
14 that reported to Oklahoma this state.
14
15 2. For tax years beginning on or after January 1, 2009, and
15
16 ending on or before December 31, 2009, there shall be added to
16
17 Oklahoma taxable income any amount in excess of One Hundred Seventy-
17
18 five Thousand Dollars ($175,000.00) which has been deducted as a
18
19 small business expense under Internal Revenue Code of 1986, as
19
20 amended, Section 179 as provided in the American Recovery and
20
21 Reinvestment Act of 2009.
21
22 C. 1. For taxable years beginning after December 31, 1987, the
22
23 taxable income of any corporation shall be further adjusted to
23
24 arrive at Oklahoma taxable income for transfers of technology to
24
Req. No. 933 Page 33
1 qualified small businesses located in Oklahoma this state. Such
1
2 transferor corporation shall be allowed an exemption from taxable
2
3 income of an amount equal to the amount of royalty payment received
3
4 as a result of such transfer; provided, however, such amount shall
4
5 not exceed ten percent (10%) of the amount of gross proceeds
5
6 received by such transferor corporation as a result of the
6
7 technology transfer. Such exemption shall be allowed for a period
7
8 not to exceed ten (10) years from the date of receipt of the first
8
9 royalty payment accruing from such transfer. No exemption may be
9
10 claimed for transfers of technology to qualified small businesses
10
11 made prior to January 1, 1988.
11
12 2. For purposes of this subsection:
12
13 a. "Qualified small business" means an entity, whether
13
14 organized as a corporation, partnership, or
14
15 proprietorship, organized for profit with its
15
16 principal place of business located within this state
16
17 and which meets the following criteria:
17
18 (1) Capitalization of not more than Two Hundred Fifty
18
19 Thousand Dollars ($250,000.00),
19
20 (2) Having at least fifty percent (50%) of its
20
21 employees and assets located in Oklahoma this
21
22 state at the time of the transfer, and
22
23 (3) Not a subsidiary or affiliate of the transferor
23
24 corporation;
24
Req. No. 933 Page 34
1 b. "Technology" means a proprietary process, formula,
1
2 pattern, device or compilation of scientific or
2
3 technical information which is not in the public
3
4 domain;
4
5 c. "Transferor corporation" means a corporation which is
5
6 the exclusive and undisputed owner of the technology
6
7 at the time the transfer is made; and
7
8 d. "Gross proceeds" means the total amount of
8
9 consideration for the transfer of technology, whether
9
10 the consideration is in money or otherwise.
10
11 D. 1. For taxable years beginning after December 31, 2005, the
11
12 taxable income of any corporation, estate or trust, shall be further
12
13 adjusted for qualifying gains receiving capital treatment. Such
13
14 corporations, estates or trusts shall be allowed a deduction from
14
15 Oklahoma taxable income for the amount of qualifying gains receiving
15
16 capital treatment earned by the corporation, estate or trust during
16
17 the taxable year and included in the federal taxable income of such
17
18 corporation, estate or trust.
18
19 2. As used in this subsection:
19
20 a. "qualifying gains receiving capital treatment" means
20
21 the amount of net capital gains, as defined in Section
21
22 1222(11) of the Internal Revenue Code of 1986, as
22
23 amended, included in the federal income tax return of
23
24 the corporation, estate or trust that result from:
24
Req. No. 933 Page 35
1 (1) the sale of real property or tangible personal
1
2 property located within Oklahoma this state that
2
3 has been directly or indirectly owned by the
3
4 corporation, estate or trust for a holding period
4
5 of at least five (5) years prior to the date of
5
6 the transaction from which such net capital gains
6
7 arise,
7
8 (2) the sale of stock or on the sale of an ownership
8
9 interest in an Oklahoma company, limited
9
10 liability company, or partnership where such
10
11 stock or ownership interest has been directly or
11
12 indirectly owned by the corporation, estate or
12
13 trust for a holding period of at least three (3)
13
14 years prior to the date of the transaction from
14
15 which the net capital gains arise, or
15
16 (3) the sale of real property, tangible personal
16
17 property or intangible personal property located
17
18 within Oklahoma this state as part of the sale of
18
19 all or substantially all of the assets of an
19
20 Oklahoma company, limited liability company, or
20
21 partnership where such property has been directly
21
22 or indirectly owned by such entity owned by the
22
23 owners of such entity, and used in or derived
23
24 from such entity for a period of at least three
24
Req. No. 933 Page 36
1 (3) years prior to the date of the transaction
1
2 from which the net capital gains arise,
2
3 b. "holding period" means an uninterrupted period of
3
4 time. The holding period shall include any additional
4
5 period when the property was held by another
5
6 individual or entity, if such additional period is
6
7 included in the taxpayer's holding period for the
7
8 asset pursuant to the Internal Revenue Code of 1986,
8
9 as amended,
9
10 c. "Oklahoma company", "limited liability company", or
10
11 "partnership" means an entity whose primary
11
12 headquarters have been located in Oklahoma this state
12
13 for at least three (3) uninterrupted years prior to
13
14 the date of the transaction from which the net capital
14
15 gains arise,
15
16 d. "direct" means the taxpayer directly owns the asset,
16
17 and
17
18 e. "indirect" means the taxpayer owns an interest in a
18
19 pass-through entity (or chain of pass-through
19
20 entities) that sells the asset that gives rise to the
20
21 qualifying gains receiving capital treatment.
21
22 (1) With respect to sales of real property or
22
23 tangible personal property located within
23
24 Oklahoma this state, the deduction described in
24
Req. No. 933 Page 37
1 this subsection shall not apply unless the pass-
1
2 through entity that makes the sale has held the
2
3 property for not less than five (5) uninterrupted
3
4 years prior to the date of the transaction that
4
5 created the capital gain, and each pass-through
5
6 entity included in the chain of ownership has
6
7 been a member, partner, or shareholder of the
7
8 pass-through entity in the tier immediately below
8
9 it for an uninterrupted period of not less than
9
10 five (5) years.
10
11 (2) With respect to sales of stock or ownership
11
12 interest in or sales of all or substantially all
12
13 of the assets of an Oklahoma company, limited
13
14 liability company, or partnership, the deduction
14
15 described in this subsection shall not apply
15
16 unless the pass-through entity that makes the
16
17 sale has held the stock or ownership interest or
17
18 the assets for not less than three (3)
18
19 uninterrupted years prior to the date of the
19
20 transaction that created the capital gain, and
20
21 each pass-through entity included in the chain of
21
22 ownership has been a member, partner or
22
23 shareholder of the pass-through entity in the
23
24
24
Req. No. 933 Page 38
1 tier immediately below it for an uninterrupted
1
2 period of not less than three (3) years.
2
3 E. The Oklahoma adjusted gross income of any individual
3
4 taxpayer shall be further adjusted as follows to arrive at Oklahoma
4
5 taxable income:
5
6 1. a. In For tax year 2024 and preceding tax years, in the
6
7 case of individuals, there shall be added or deducted,
7
8 as the case may be, the difference necessary to allow
8
9 personal exemptions of One Thousand Dollars
9
10 ($1,000.00) in lieu of the personal exemptions allowed
10
11 by the Internal Revenue Code of 1986, as amended.
11
12 b. There For tax year 2024 and preceding tax years, there
12
13 shall be allowed an additional exemption of One
13
14 Thousand Dollars ($1,000.00) for each taxpayer or
14
15 spouse who is blind at the close of the tax year. For
15
16 purposes of this subparagraph, an individual is blind
16
17 only if the central visual acuity of the individual
17
18 does not exceed 20/200 in the better eye with
18
19 correcting lenses, or if the visual acuity of the
19
20 individual is greater than 20/200, but is accompanied
20
21 by a limitation in the fields of vision such that the
21
22 widest diameter of the visual field subtends an angle
22
23 no greater than twenty (20) degrees.
23
24
24
Req. No. 933 Page 39
1 c. There For tax year 2024 and preceding tax years, there
1
2 shall be allowed an additional exemption of One
2
3 Thousand Dollars ($1,000.00) for each taxpayer or
3
4 spouse who is sixty-five (65) years of age or older at
4
5 the close of the tax year based upon the filing status
5
6 and federal adjusted gross income of the taxpayer.
6
7 Taxpayers with the following filing status may claim
7
8 this exemption if the federal adjusted gross income
8
9 does not exceed:
9
10 (1) Twenty-five Thousand Dollars ($25,000.00) if
10
11 married and filing jointly,
11
12 (2) Twelve Thousand Five Hundred Dollars ($12,500.00)
12
13 if married and filing separately,
13
14 (3) Fifteen Thousand Dollars ($15,000.00) if single,
14
15 and
15
16 (4) Nineteen Thousand Dollars ($19,000.00) if a
16
17 qualifying head of household.
17
18 Provided, for taxable years beginning after December
18
19 31, 1999, amounts included in the calculation of
19
20 federal adjusted gross income pursuant to the
20
21 conversion of a traditional individual retirement
21
22 account to a Roth individual retirement account shall
22
23 be excluded from federal adjusted gross income for
23
24
24
Req. No. 933 Page 40
1 purposes of the income thresholds provided in this
1
2 subparagraph.
2
3 2. a. For taxable years beginning on or before December 31,
3
4 2005, in the case of individuals who use the standard
4
5 deduction in determining taxable income, there shall
5
6 be added or deducted, as the case may be, the
6
7 difference necessary to allow a standard deduction in
7
8 lieu of the standard deduction allowed by the Internal
8
9 Revenue Code of 1986, as amended, in an amount equal
9
10 to the larger of fifteen percent (15%) of the Oklahoma
10
11 adjusted gross income or One Thousand Dollars
11
12 ($1,000.00), but not to exceed Two Thousand Dollars
12
13 ($2,000.00), except that in the case of a married
13
14 individual filing a separate return such deduction
14
15 shall be the larger of fifteen percent (15%) of such
15
16 Oklahoma adjusted gross income or Five Hundred Dollars
16
17 ($500.00), but not to exceed the maximum amount of One
17
18 Thousand Dollars ($1,000.00).
18
19 b. For taxable years beginning on or after January 1,
19
20 2006, and before January 1, 2007, in the case of
20
21 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. 933 Page 41
1 deduction allowed by the Internal Revenue Code of
1
2 1986, as amended, in an amount equal to:
2
3 (1) Three Thousand Dollars ($3,000.00), if the filing
3
4 status is married filing joint, head of household
4
5 or qualifying widow, or
5
6 (2) Two Thousand Dollars ($2,000.00), if the filing
6
7 status is single or married filing separate.
7
8 c. For the taxable year beginning on January 1, 2007, and
8
9 ending December 31, 2007, in the case of individuals
9
10 who use the standard deduction in determining taxable
10
11 income, there shall be added or deducted, as the case
11
12 may be, the difference necessary to allow a standard
12
13 deduction in lieu of the standard deduction allowed by
13
14 the Internal Revenue Code of 1986, as amended, in an
14
15 amount equal to:
15
16 (1) Five Thousand Five Hundred Dollars ($5,500.00),
16
17 if the filing status is married filing joint or
17
18 qualifying widow, or
18
19 (2) Four Thousand One Hundred Twenty-five Dollars
19
20 ($4,125.00) for a head of household, or
20
21 (3) Two Thousand Seven Hundred Fifty Dollars
21
22 ($2,750.00), if the filing status is single or
22
23 married filing separate.
23
24
24
Req. No. 933 Page 42
1 d. For the taxable year beginning on January 1, 2008, and
1
2 ending December 31, 2008, in the case of individuals
2
3 who use the standard deduction in determining taxable
3
4 income, there shall be added or deducted, as the case
4
5 may be, the difference necessary to allow a standard
5
6 deduction in lieu of the standard deduction allowed by
6
7 the Internal Revenue Code of 1986, as amended, in an
7
8 amount equal to:
8
9 (1) Six Thousand Five Hundred Dollars ($6,500.00), if
9
10 the filing status is married filing joint or
10
11 qualifying widow,
11
12 (2) Four Thousand Eight Hundred Seventy-five Dollars
12
13 ($4,875.00) for a head of household, or
13
14 (3) Three Thousand Two Hundred Fifty Dollars
14
15 ($3,250.00), if the filing status is single or
15
16 married filing separate.
16
17 e. For the taxable year beginning on January 1, 2009, and
17
18 ending December 31, 2009, in the case of individuals
18
19 who use the standard deduction in determining taxable
19
20 income, there shall be added or deducted, as the case
20
21 may be, the difference necessary to allow a standard
21
22 deduction in lieu of the standard deduction allowed by
22
23 the Internal Revenue Code of 1986, as amended, in an
23
24 amount equal to:
24
Req. No. 933 Page 43
1 (1) Eight Thousand Five Hundred Dollars ($8,500.00),
1
2 if the filing status is married filing joint or
2
3 qualifying widow,
3
4 (2) Six Thousand Three Hundred Seventy-five Dollars
4
5 ($6,375.00) for a head of household, or
5
6 (3) Four Thousand Two Hundred Fifty Dollars
6
7 ($4,250.00), if the filing status is single or
7
8 married filing separate.
8
9 Oklahoma adjusted gross income shall be increased by
9
10 any amounts paid for motor vehicle excise taxes which
10
11 were deducted as allowed by the Internal Revenue Code
11
12 of 1986, as amended.
12
13 f. For taxable years beginning on or after January 1,
13
14 2010, and ending on December 31, 2016, in the case of
14
15 individuals who use the standard deduction in
15
16 determining taxable income, there shall be added or
16
17 deducted, as the case may be, the difference necessary
17
18 to allow a standard deduction equal to the standard
18
19 deduction allowed by the Internal Revenue Code of
19
20 1986, as amended, based upon the amount and filing
20
21 status prescribed by such Code for purposes of filing
21
22 federal individual income tax returns.
22
23 g. For taxable years beginning on or after January 1,
23
24 2017 tax years 2017 through 2024, in the case of
24
Req. No. 933 Page 44
1 individuals who use the standard deduction in
1
2 determining taxable income, there shall be added or
2
3 deducted, as the case may be, the difference necessary
3
4 to allow a standard deduction in lieu of the standard
4
5 deduction allowed by the Internal Revenue Code of
5
6 1986, as amended, as follows:
6
7 (1) Six Thousand Three Hundred Fifty Dollars
7
8 ($6,350.00) for single or married filing
8
9 separately,
9
10 (2) Twelve Thousand Seven Hundred Dollars
10
11 ($12,700.00) for married filing jointly or
11
12 qualifying widower with dependent child, and
12
13 (3) Nine Thousand Three Hundred Fifty Dollars
13
14 ($9,350.00) for head of household.
14
15 h. For tax year 2025, in the case of individuals who use
15
16 the standard deduction in determining taxable income,
16
17 there shall be added or deducted, as the case may be,
17
18 the difference necessary to allow a standard deduction
18
19 in lieu of the standard deduction allowed by the
19
20 Internal Revenue Code of 1986, as amended, as follows:
20
21 (1) Fourteen Thousand Dollars ($14,000.00) for single
21
22 or married filing separately,
22
23
23
24
24
Req. No. 933 Page 45
1 (2) Twenty-eight Thousand Dollars ($28,000.00) for
1
2 married filing jointly or qualifying widower with
2
3 dependent child, and
3
4 (3) Twenty-one Thousand Five Hundred Dollars
4
5 ($21,500.00) for head of household.
5
6 i. For tax year 2026 and subsequent tax years, in the
6
7 case of individuals who use the standard deduction in
7
8 determining taxable income, there shall be added or
8
9 deducted, as the case may be, the difference necessary
9
10 to allow a standard deduction equal to One Thousand
10
11 Dollars ($1,000.00) less than the standard deduction
11
12 allowed by the Internal Revenue Code of 1986, as
12
13 amended, for those filing single, head of household,
13
14 or married filing separately, and Two Thousand Dollars
14
15 ($2,000.00) less than the standard deduction allowed
15
16 by the Internal Revenue Code of 1986, as amended, for
16
17 those married filing jointly or qualifying widower
17
18 with dependent child, based upon the amount and filing
18
19 status prescribed by such Code for purposes of filing
19
20 federal individual income tax returns.
20
21 3. a. In the case of resident and part-year resident
21
22 individuals having adjusted gross income from sources
22
23 both within and without the state, the itemized or
23
24 standard deductions and personal exemptions shall be
24
Req. No. 933 Page 46
1 reduced to an amount which is the same portion of the
1
2 total thereof as Oklahoma adjusted gross income is of
2
3 adjusted gross income. To the extent itemized
3
4 deductions include allowable moving expense, proration
4
5 of moving expense shall not be required or permitted
5
6 but allowable moving expense shall be fully deductible
6
7 for those taxpayers moving within or into Oklahoma
7
8 this state and no part of moving expense shall be
8
9 deductible for those taxpayers moving without or out
9
10 of Oklahoma this state. All other itemized or
10
11 standard deductions and personal exemptions shall be
11
12 subject to proration as provided by law.
12
13 b. For taxable years beginning on or after January 1,
13
14 2018, the net amount of itemized deductions allowable
14
15 on an Oklahoma income tax return, subject to the
15
16 provisions of paragraph 24 of this subsection, shall
16
17 not exceed Seventeen Thousand Dollars ($17,000.00).
17
18 For purposes of this subparagraph, charitable
18
19 contributions and medical expenses deductible for
19
20 federal income tax purposes shall be excluded from the
20
21 amount of Seventeen Thousand Dollars ($17,000.00) as
21
22 specified by this subparagraph.
22
23 4. A resident individual with a physical disability
23
24 constituting a substantial handicap to employment may deduct from
24
Req. No. 933 Page 47
1 Oklahoma adjusted gross income such expenditures to modify a motor
1
2 vehicle, home or workplace as are necessary to compensate for his or
2
3 her handicap. A veteran certified by the United States Department
3
4 of Veterans Affairs of the federal government as having a service-
4
5 connected disability shall be conclusively presumed to be an
5
6 individual with a physical disability constituting a substantial
6
7 handicap to employment. The Tax Commission shall promulgate rules
7
8 containing a list of combinations of common disabilities and
8
9 modifications which may be presumed to qualify for this deduction.
9
10 The Tax Commission shall prescribe necessary requirements for
10
11 verification.
11
12 5. a. Before July 1, 2010, the first One Thousand Five
12
13 Hundred Dollars ($1,500.00) received by any person
13
14 from the United States as salary or compensation in
14
15 any form, other than retirement benefits, as a member
15
16 of any component of the Armed Forces of the United
16
17 States shall be deducted from taxable income.
17
18 b. On or after July 1, 2010, one hundred percent (100%)
18
19 of the income received by any person from the United
19
20 States as salary or compensation in any form, other
20
21 than retirement benefits, as a member of any component
21
22 of the Armed Forces of the United States shall be
22
23 deducted from taxable income.
23
24
24
Req. No. 933 Page 48
1 c. Whenever the filing of a timely income tax return by a
1
2 member of the Armed Forces of the United States is
2
3 made impracticable or impossible of accomplishment by
3
4 reason of:
4
5 (1) absence from the United States, which term
5
6 includes only the states and the District of
6
7 Columbia,
7
8 (2) absence from the State of Oklahoma this state
8
9 while on active duty, or
9
10 (3) confinement in a hospital within the United
10
11 States for treatment of wounds, injuries or
11
12 disease,
12
13 the time for filing a return and paying an income tax
13
14 shall be and is hereby extended without incurring
14
15 liability for interest or penalties, to the fifteenth
15
16 day of the third month following the month in which:
16
17 (a) Such individual shall return to the United
17
18 States if the extension is granted pursuant
18
19 to subparagraph a division 1 of this
19
20 paragraph subparagraph, return to the State
20
21 of Oklahoma this state if the extension is
21
22 granted pursuant to subparagraph b division
22
23 2 of this paragraph subparagraph or be
23
24 discharged from such hospital if the
24
Req. No. 933 Page 49
1 extension is granted pursuant to
1
2 subparagraph c division 3 of this paragraph
2
3 subparagraph, or
3
4 (b) An executor, administrator, or conservator
4
5 of the estate of the taxpayer is appointed,
5
6 whichever event occurs the earliest.
6
7 Provided, that the Tax Commission may, in its discretion, grant
7
8 any member of the Armed Forces of the United States an extension of
8
9 time for filing of income tax returns and payment of income tax
9
10 without incurring liabilities for interest or penalties. Such
10
11 extension may be granted only when in the judgment of the Tax
11
12 Commission a good cause exists therefor and may be for a period in
12
13 excess of six (6) months. A record of every such extension granted,
13
14 and the reason therefor, shall be kept.
14
15 6. Before July 1, 2010, the salary or any other form of
15
16 compensation, received from the United States by a member of any
16
17 component of the Armed Forces of the United States, shall be
17
18 deducted from taxable income during the time in which the person is
18
19 detained by the enemy in a conflict, is a prisoner of war or is
19
20 missing in action and not deceased; provided, after July 1, 2010,
20
21 all such salary or compensation shall be subject to the deduction as
21
22 provided pursuant to paragraph 5 of this subsection.
22
23 7. a. An individual taxpayer, whether resident or
23
24 nonresident, may deduct an amount equal to the federal
24
Req. No. 933 Page 50
1 income taxes paid by the taxpayer during the taxable
1
2 year.
2
3 b. Federal taxes as described in subparagraph a of this
3
4 paragraph shall be deductible by any individual
4
5 taxpayer, whether resident or nonresident, only to the
5
6 extent they relate to income subject to taxation
6
7 pursuant to the provisions of the Oklahoma Income Tax
7
8 Act. The maximum amount allowable in the preceding
8
9 paragraph 5 of this subsection shall be prorated on
9
10 the ratio of the Oklahoma adjusted gross income to
10
11 federal adjusted gross income.
11
12 c. For the purpose of this paragraph, "federal income
12
13 taxes paid" shall mean federal income taxes, surtaxes
13
14 imposed on incomes or excess profits taxes, as though
14
15 the taxpayer was on the accrual basis. In determining
15
16 the amount of deduction for federal income taxes for
16
17 tax year 2001, the amount of the deduction shall not
17
18 be adjusted by the amount of any accelerated ten
18
19 percent (10%) tax rate bracket credit or advanced
19
20 refund of the credit received during the tax year
20
21 provided pursuant to the federal Economic Growth and
21
22 Tax Relief Reconciliation Act of 2001, P.L. No. 107-
22
23 16, and the advanced refund of such credit shall not
23
24 be subject to taxation.
24
Req. No. 933 Page 51
1 d. The provisions of this paragraph shall apply to all
1
2 taxable years ending after December 31, 1978, and
2
3 beginning before January 1, 2006.
3
4 8. Retirement benefits not to exceed Five Thousand Five Hundred
4
5 Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five
5
6 Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand
6
7 Dollars ($10,000.00) for the 2006 tax year and all subsequent tax
7
8 years, which are received by an individual from the civil service of
8
9 the United States, the Oklahoma Public Employees Retirement System,
9
10 the Teachers' Retirement System of Oklahoma, the Oklahoma Law
10
11 Enforcement Retirement System, the Oklahoma Firefighters Pension and
11
12 Retirement System, the Oklahoma Police Pension and Retirement
12
13 System, the employee retirement systems created by counties pursuant
13
14 to Section 951 et seq. of Title 19 of the Oklahoma Statutes, the The
14
15 Uniform Retirement System for Justices and Judges, the Oklahoma
15
16 Wildlife Conservation Department Retirement Fund, the Oklahoma
16
17 Employment Security Commission Retirement Plan, or the employee
17
18 retirement systems created by municipalities pursuant to Section 48-
18
19 101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt
19
20 from taxable income.
20
21 9. In taxable years beginning after December 3l, 1984, Social
21
22 Security benefits received by an individual shall be exempt from
22
23 taxable income, to the extent such benefits are included in the
23
24 federal adjusted gross income pursuant to the provisions of Section
24
Req. No. 933 Page 52
1 86 of the Internal Revenue Code of 1986, as amended, 26 U.S.C.,
1
2 Section 86.
2
3 10. For taxable years beginning after December 31, 1994, lump-
3
4 sum distributions from employer plans of deferred compensation,
4
5 which are not qualified plans within the meaning of Section 401(a)
5
6 of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section
6
7 401(a), and which are deposited in and accounted for within a
7
8 separate bank account or brokerage account in a financial
8
9 institution within this state, shall be excluded from taxable income
9
10 in the same manner as a qualifying rollover contribution to an
10
11 individual retirement account within the meaning of Section 408 of
11
12 the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section
12
13 408. Amounts withdrawn from such bank or brokerage account,
13
14 including any earnings thereon, shall be included in taxable income
14
15 when withdrawn in the same manner as withdrawals from individual
15
16 retirement accounts within the meaning of Section 408 of the
16
17 Internal Revenue Code of 1986, as amended.
17
18 11. In taxable years beginning after December 31, 1995,
18
19 contributions made to and interest received from a medical savings
19
20 account established pursuant to Sections 2621 through 2623 of Title
20
21 63 of the Oklahoma Statutes shall be exempt from taxable income.
21
22 12. For taxable years beginning after December 31, 1996, the
22
23 Oklahoma adjusted gross income of any individual taxpayer who is a
23
24 swine or poultry producer may be further adjusted for the deduction
24
Req. No. 933 Page 53
1 for depreciation allowed for new construction or expansion costs
1
2 which may be computed using the same depreciation method elected for
2
3 federal income tax purposes except that the useful life shall be
3
4 seven (7) years for purposes of this paragraph. If depreciation is
4
5 allowed as a deduction in determining the adjusted gross income of
5
6 an individual, any depreciation calculated and claimed pursuant to
6
7 this section shall in no event be a duplication of any depreciation
7
8 allowed or permitted on the federal income tax return of the
8
9 individual.
9
10 13. a. In taxable years beginning before January 1, 2005,
10
11 retirement benefits not to exceed the amounts
11
12 specified in this paragraph, which are received by an
12
13 individual sixty-five (65) years of age or older and
13
14 whose Oklahoma adjusted gross income is Twenty-five
14
15 Thousand Dollars ($25,000.00) or less if the filing
15
16 status is single, head of household, or married filing
16
17 separate, or Fifty Thousand Dollars ($50,000.00) or
17
18 less if the filing status is married filing joint or
18
19 qualifying widow, shall be exempt from taxable income.
19
20 In taxable years beginning after December 31, 2004,
20
21 retirement benefits not to exceed the amounts
21
22 specified in this paragraph, which are received by an
22
23 individual whose Oklahoma adjusted gross income is
23
24
24
Req. No. 933 Page 54
1 less than the qualifying amount specified in this
1
2 paragraph, shall be exempt from taxable income.
2
3 b. For purposes of this paragraph, the qualifying amount
3
4 shall be as follows:
4
5 (1) in taxable years beginning after December 31,
5
6 2004, and prior to January 1, 2007, the
6
7 qualifying amount shall be Thirty-seven Thousand
7
8 Five Hundred Dollars ($37,500.00) or less if the
8
9 filing status is single, head of household, or
9
10 married filing separate, or Seventy-five Thousand
10
11 Dollars ($75,000.00) or less if the filing status
11
12 is married filing jointly or qualifying widow,
12
13 (2) in the taxable year beginning January 1, 2007,
13
14 the qualifying amount shall be Fifty Thousand
14
15 Dollars ($50,000.00) or less if the filing status
15
16 is single, head of household, or married filing
16
17 separate, or One Hundred Thousand Dollars
17
18 ($100,000.00) or less if the filing status is
18
19 married filing jointly or qualifying widow,
19
20 (3) in the taxable year beginning January 1, 2008,
20
21 the qualifying amount shall be Sixty-two Thousand
21
22 Five Hundred Dollars ($62,500.00) or less if the
22
23 filing status is single, head of household, or
23
24 married filing separate, or One Hundred Twenty-
24
Req. No. 933 Page 55
1 five Thousand Dollars ($125,000.00) or less if
1
2 the filing status is married filing jointly or
2
3 qualifying widow,
3
4 (4) in the taxable year beginning January 1, 2009,
4
5 the qualifying amount shall be One Hundred
5
6 Thousand Dollars ($100,000.00) or less if the
6
7 filing status is single, head of household, or
7
8 married filing separate, or Two Hundred Thousand
8
9 Dollars ($200,000.00) or less if the filing
9
10 status is married filing jointly or qualifying
10
11 widow, and
11
12 (5) in the taxable year beginning January 1, 2010,
12
13 and subsequent taxable years, there shall be no
13
14 limitation upon the qualifying amount.
14
15 c. For purposes of this paragraph, "retirement benefits"
15
16 means the total distributions or withdrawals from the
16
17 following:
17
18 (1) an employee pension benefit plan which satisfies
18
19 the requirements of Section 401 of the Internal
19
20 Revenue Code of 1986, as amended, 26 U.S.C.,
20
21 Section 401,
21
22 (2) an eligible deferred compensation plan that
22
23 satisfies the requirements of Section 457 of the
23
24
24
Req. No. 933 Page 56
1 Internal Revenue Code of 1986, as amended, 26
1
2 U.S.C., Section 457,
2
3 (3) an individual retirement account, annuity or
3
4 trust or simplified employee pension that
4
5 satisfies the requirements of Section 408 of the
5
6 Internal Revenue Code of 1986, as amended, 26
6
7 U.S.C., Section 408,
7
8 (4) an employee annuity subject to the provisions of
8
9 Section 403(a) or (b) of the Internal Revenue
9
10 Code of 1986, as amended, 26 U.S.C., Section
10
11 403(a) or (b),
11
12 (5) United States Retirement Bonds which satisfy the
12
13 requirements of Section 86 of the Internal
13
14 Revenue Code of 1986, as amended, 26 U.S.C.,
14
15 Section 86, or
15
16 (6) lump-sum distributions from a retirement plan
16
17 which satisfies the requirements of Section
17
18 402(e) of the Internal Revenue Code of 1986, as
18
19 amended, 26 U.S.C., Section 402(e).
19
20 d. The amount of the exemption provided by this paragraph
20
21 shall be limited to 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 Ten Thousand Dollars ($10,000.00) for the tax year
24
Req. No. 933 Page 57
1 2006 and for all subsequent tax years. Any individual
1
2 who claims the exemption provided for in paragraph 8
2
3 of this subsection shall not be permitted to claim a
3
4 combined total exemption pursuant to this paragraph
4
5 and paragraph 8 of this subsection in an amount
5
6 exceeding Five Thousand Five Hundred Dollars
6
7 ($5,500.00) for the 2004 tax year, Seven Thousand Five
7
8 Hundred Dollars ($7,500.00) for the 2005 tax year and
8
9 Ten Thousand Dollars ($10,000.00) for the 2006 tax
9
10 year and all subsequent tax years.
10
11 14. In taxable years beginning after December 31, 1999, for an
11
12 individual engaged in production agriculture who has filed a
12
13 Schedule F form with the taxpayer's federal income tax return for
13
14 such taxable year, there shall be excluded from taxable income any
14
15 amount which was included as federal taxable income or federal
15
16 adjusted gross income and which consists of the discharge of an
16
17 obligation by a creditor of the taxpayer incurred to finance the
17
18 production of agricultural products.
18
19 15. In taxable years beginning December 31, 2000, an amount
19
20 equal to one hundred percent (100%) of the amount of any scholarship
20
21 or stipend received from participation in the Oklahoma Police Corps
21
22 Program, as established in Section 2-140.3 of Title 47 of the
22
23 Oklahoma Statutes shall be exempt from taxable income.
23
24
24
Req. No. 933 Page 58
1 16. a. In taxable years beginning after December 31, 2001,
1
2 and before January 1, 2005, there shall be allowed a
2
3 deduction in the amount of contributions to accounts
3
4 established pursuant to the Oklahoma College Savings
4
5 Plan Act. The deduction shall equal the amount of
5
6 contributions to accounts, but in no event shall the
6
7 deduction for each contributor exceed Two Thousand
7
8 Five Hundred Dollars ($2,500.00) each taxable year for
8
9 each account.
9
10 b. In taxable years beginning after December 31, 2004,
10
11 each taxpayer shall be allowed a deduction for
11
12 contributions to accounts established pursuant to the
12
13 Oklahoma College Savings Plan Act. The maximum annual
13
14 deduction shall equal the amount of contributions to
14
15 all such accounts plus any contributions to such
15
16 accounts by the taxpayer for prior taxable years after
16
17 December 31, 2004, which were not deducted, but in no
17
18 event shall the deduction for each tax year exceed Ten
18
19 Thousand Dollars ($10,000.00) for each individual
19
20 taxpayer or Twenty Thousand Dollars ($20,000.00) for
20
21 taxpayers filing a joint return. Any amount of a
21
22 contribution that is not deducted by the taxpayer in
22
23 the year for which the contribution is made may be
23
24 carried forward as a deduction from income for the
24
Req. No. 933 Page 59
1 succeeding five (5) years. For taxable years
1
2 beginning after December 31, 2005, deductions may be
2
3 taken for contributions and rollovers made during a
3
4 taxable year and up to April 15 of the succeeding
4
5 year, or the due date of a taxpayer's state income tax
5
6 return, excluding extensions, whichever is later.
6
7 Provided, a deduction for the same contribution may
7
8 not be taken for two (2) different taxable years.
8
9 c. In taxable years beginning after December 31, 2006,
9
10 deductions for contributions made pursuant to
10
11 subparagraph b of this paragraph shall be limited as
11
12 follows:
12
13 (1) for a taxpayer who qualified for the five-year
13
14 carryforward election and who takes a rollover or
14
15 nonqualified withdrawal during that period, the
15
16 tax deduction otherwise available pursuant to
16
17 subparagraph b of this paragraph shall be reduced
17
18 by the amount which is equal to the rollover or
18
19 nonqualified withdrawal, and
19
20 (2) for a taxpayer who elects to take a rollover or
20
21 nonqualified withdrawal within the same tax year
21
22 in which a contribution was made to the
22
23 taxpayer's account, the tax deduction otherwise
23
24 available pursuant to subparagraph b of this
24
Req. No. 933 Page 60
1 paragraph shall be reduced by the amount of the
1
2 contribution which is equal to the rollover or
2
3 nonqualified withdrawal.
3
4 d. If a taxpayer elects to take a rollover on a
4
5 contribution for which a deduction has been taken
5
6 pursuant to subparagraph b of this paragraph within
6
7 one (1) year of the date of contribution, the amount
7
8 of such rollover shall be included in the adjusted
8
9 gross income of the taxpayer in the taxable year of
9
10 the rollover.
10
11 e. If a taxpayer makes a nonqualified withdrawal of
11
12 contributions for which a deduction was taken pursuant
12
13 to subparagraph b of this paragraph, such nonqualified
13
14 withdrawal and any earnings thereon shall be included
14
15 in the adjusted gross income of the taxpayer in the
15
16 taxable year of the nonqualified withdrawal.
16
17 f. As used in this paragraph:
17
18 (1) "non-qualified withdrawal" means a withdrawal
18
19 from an Oklahoma College Savings Plan account
19
20 other than one of the following:
20
21 (a) a qualified withdrawal,
21
22 (b) a withdrawal made as a result of the death
22
23 or disability of the designated beneficiary
23
24 of an account,
24
Req. No. 933 Page 61
1 (c) a withdrawal that is made on the account of
1
2 a scholarship or the allowance or payment
2
3 described in Section 135(d)(1)(B) or (C) or
3
4 by the Internal Revenue Code of 1986, as
4
5 amended, received by the designated
5
6 beneficiary to the extent the amount of the
6
7 refund does not exceed the amount of the
7
8 scholarship, allowance, or payment, or
8
9 (d) a rollover or change of designated
9
10 beneficiary as permitted by subsection F of
10
11 Section 3970.7 of Title 70 of the Oklahoma
11
12 Statutes, and
12
13 (2) "rollover" means the transfer of funds from the
13
14 Oklahoma College Savings Plan to any other plan
14
15 under Section 529 of the Internal Revenue Code of
15
16 1986, as amended.
16
17 17. For tax years 2006 through 2021, retirement benefits
17
18 received by an individual from any component of the Armed Forces of
18
19 the United States in an amount not to exceed the greater of seventy-
19
20 five percent (75%) of such benefits or Ten Thousand Dollars
20
21 ($10,000.00) shall be exempt from taxable income but in no case less
21
22 than the amount of the exemption provided by paragraph 13 of this
22
23 subsection. For tax year 2022 and subsequent tax years, retirement
23
24
24
Req. No. 933 Page 62
1 benefits received by an individual from any component of the Armed
1
2 Forces of the United States shall be exempt from taxable income.
2
3 18. For taxable years beginning after December 31, 2006,
3
4 retirement benefits received by federal civil service retirees,
4
5 including survivor annuities, paid in lieu of Social Security
5
6 benefits shall be exempt from taxable income to the extent such
6
7 benefits are included in the federal adjusted gross income pursuant
7
8 to the provisions of Section 86 of the Internal Revenue Code of
8
9 1986, as amended, 26 U.S.C., Section 86, according to the following
9
10 schedule:
10
11 a. in the taxable year beginning January 1, 2007, twenty
11
12 percent (20%) of such benefits shall be exempt,
12
13 b. in the taxable year beginning January 1, 2008, forty
13
14 percent (40%) of such benefits shall be exempt,
14
15 c. in the taxable year beginning January 1, 2009, sixty
15
16 percent (60%) of such benefits shall be exempt,
16
17 d. in the taxable year beginning January 1, 2010, eighty
17
18 percent (80%) of such benefits shall be exempt, and
18
19 e. in the taxable year beginning January 1, 2011, and
19
20 subsequent taxable years, one hundred percent (100%)
20
21 of such benefits shall be exempt.
21
22 19. a. For taxable years beginning after December 31, 2007, a
22
23 resident individual may deduct up to Ten Thousand
23
24 Dollars ($10,000.00) from Oklahoma adjusted gross
24
Req. No. 933 Page 63
1 income if the individual, or the dependent of the
1
2 individual, while living, donates one or more human
2
3 organs of the individual to another human being for
3
4 human organ transplantation. As used in this
4
5 paragraph, "human organ" means all or part of a liver,
5
6 pancreas, kidney, intestine, lung, or bone marrow. A
6
7 deduction that is claimed under this paragraph may be
7
8 claimed in the taxable year in which the human organ
8
9 transplantation occurs.
9
10 b. An individual may claim this deduction only once, and
10
11 the deduction may be claimed only for unreimbursed
11
12 expenses that are incurred by the individual and
12
13 related to the organ donation of the individual.
13
14 c. The Oklahoma Tax Commission shall promulgate rules to
14
15 implement the provisions of this paragraph which shall
15
16 contain a specific list of expenses which may be
16
17 presumed to qualify for the deduction. The Tax
17
18 Commission shall prescribe necessary requirements for
18
19 verification.
19
20 20. For taxable years beginning after December 31, 2009, there
20
21 shall be exempt from taxable income any amount received by the
21
22 beneficiary of the death benefit for an emergency medical technician
22
23 or a registered emergency medical responder provided by Section 1-
23
24 2505.1 of Title 63 of the Oklahoma Statutes.
24
Req. No. 933 Page 64
1 21. For taxable years beginning after December 31, 2008,
1
2 taxable income shall be increased by any unemployment compensation
2
3 exempted under Section 85(c) of the Internal Revenue Code of 1986,
3
4 as amended, 26 U.S.C., Section 85(c)(2009).
4
5 22. For taxable years beginning after December 31, 2008, there
5
6 shall be exempt from taxable income any payment in an amount less
6
7 than Six Hundred Dollars ($600.00) received by a person as an award
7
8 for participation in a competitive livestock show event. For
8
9 purposes of this paragraph, the payment shall be treated as a
9
10 scholarship amount paid by the entity sponsoring the event and the
10
11 sponsoring entity shall cause the payment to be categorized as a
11
12 scholarship in its books and records.
12
13 23. For taxable years beginning on or after January 1, 2016,
13
14 taxable income shall be increased by any amount of state and local
14
15 sales or income taxes deducted under 26 U.S.C., Section 164 of the
15
16 Internal Revenue Code of 1986, as amended. If the amount of state
16
17 and local taxes deducted on the federal return is limited, taxable
17
18 income on the state return shall be increased only by the amount
18
19 actually deducted after any such limitations are applied.
19
20 24. For taxable years beginning after December 31, 2020, each
20
21 taxpayer shall be allowed a deduction for contributions to accounts
21
22 established pursuant to the Achieving a Better Life Experience
22
23 (ABLE) Program program as established in Section 4001.1 et seq. of
23
24 Title 56 of the Oklahoma Statutes. For any tax year, the deduction
24
Req. No. 933 Page 65
1 provided for in this paragraph shall not exceed Ten Thousand Dollars
1
2 ($10,000.00) for an individual taxpayer or Twenty Thousand Dollars
2
3 ($20,000.00) for taxpayers filing a joint return. Any amount of
3
4 contribution not deducted by the taxpayer in the tax year for which
4
5 the contribution is made may be carried forward as a deduction from
5
6 income for up to five (5) tax years. Deductions may be taken for
6
7 contributions made during the tax year and through April 15 of the
7
8 succeeding tax year, or through the due date of a taxpayer's state
8
9 income tax return excluding extensions, whichever is later.
9
10 Provided, a deduction for the same contribution may not be taken in
10
11 more than one (1) tax year.
11
12 F. 1. For taxable years beginning after December 31, 2004, a
12
13 deduction from the Oklahoma adjusted gross income of any individual
13
14 taxpayer shall be allowed for qualifying gains receiving capital
14
15 treatment that are included in the federal adjusted gross income of
15
16 such individual taxpayer during the taxable year.
16
17 2. As used in this subsection:
17
18 a. "qualifying gains receiving capital treatment" means
18
19 the amount of net capital gains, as defined in Section
19
20 1222(11) of the Internal Revenue Code of 1986, as
20
21 amended, included in an individual taxpayer's federal
21
22 income tax return that result from:
22
23 (1) the sale of real property or tangible personal
23
24 property located within Oklahoma this state that
24
Req. No. 933 Page 66
1 has been directly or indirectly owned by the
1
2 individual taxpayer for a holding period of at
2
3 least five (5) years prior to the date of the
3
4 transaction from which such net capital gains
4
5 arise,
5
6 (2) the sale of stock or the sale of a direct or
6
7 indirect ownership interest in an Oklahoma
7
8 company, limited liability company, or
8
9 partnership where such stock or ownership
9
10 interest has been directly or indirectly owned by
10
11 the individual taxpayer for a holding period of
11
12 at least two (2) years prior to the date of the
12
13 transaction from which the net capital gains
13
14 arise, or
14
15 (3) the sale of real property, tangible personal
15
16 property or intangible personal property located
16
17 within Oklahoma this state as part of the sale of
17
18 all or substantially all of the assets of an
18
19 Oklahoma company, limited liability company, or
19
20 partnership or an Oklahoma proprietorship
20
21 business enterprise where such property has been
21
22 directly or indirectly owned by such entity or
22
23 business enterprise or owned by the owners of
23
24 such entity or business enterprise for a period
24
Req. No. 933 Page 67
1 of at least two (2) years prior to the date of
1
2 the transaction from which the net capital gains
2
3 arise,
3
4 b. "holding period" means an uninterrupted period of
4
5 time. The holding period shall include any additional
5
6 period when the property was held by another
6
7 individual or entity, if such additional period is
7
8 included in the taxpayer's holding period for the
8
9 asset pursuant to the Internal Revenue Code of 1986,
9
10 as amended,
10
11 c. "Oklahoma company," "limited liability company," or
11
12 "partnership" means an entity whose primary
12
13 headquarters have been located in Oklahoma this state
13
14 for at least three (3) uninterrupted years prior to
14
15 the date of the transaction from which the net capital
15
16 gains arise,
16
17 d. "direct" means the individual taxpayer directly owns
17
18 the asset,
18
19 e. "indirect" means the individual taxpayer owns an
19
20 interest in a pass-through entity (or chain of pass-
20
21 through entities) that sells the asset that gives rise
21
22 to the qualifying gains receiving capital treatment.
22
23 (1) With respect to sales of real property or
23
24 tangible personal property located within
24
Req. No. 933 Page 68
1 Oklahoma this state, the deduction described in
1
2 this subsection shall not apply unless the pass-
2
3 through entity that makes the sale has held the
3
4 property for not less than five (5) uninterrupted
4
5 years prior to the date of the transaction that
5
6 created the capital gain, and each pass-through
6
7 entity included in the chain of ownership has
7
8 been a member, partner, or shareholder of the
8
9 pass-through entity in the tier immediately below
9
10 it for an uninterrupted period of not less than
10
11 five (5) years.
11
12 (2) With respect to sales of stock or ownership
12
13 interest in or sales of all or substantially all
13
14 of the assets of an Oklahoma company, limited
14
15 liability company, partnership or Oklahoma
15
16 proprietorship business enterprise, the deduction
16
17 described in this subsection shall not apply
17
18 unless the pass-through entity that makes the
18
19 sale has held the stock or ownership interest for
19
20 not less than two (2) uninterrupted years prior
20
21 to the date of the transaction that created the
21
22 capital gain, and each pass-through entity
22
23 included in the chain of ownership has been a
23
24 member, partner or shareholder of the pass-
24
Req. No. 933 Page 69
1 through entity in the tier immediately below it
1
2 for an uninterrupted period of not less than two
2
3 (2) years. For purposes of this division,
3
4 uninterrupted ownership prior to July 1, 2007,
4
5 shall be included in the determination of the
5
6 required holding period prescribed by this
6
7 division, and
7
8 f. "Oklahoma proprietorship business enterprise" means a
8
9 business enterprise whose income and expenses have
9
10 been reported on Schedule C or F of an individual
10
11 taxpayer's federal income tax return, or any similar
11
12 successor schedule published by the Internal Revenue
12
13 Service and whose primary headquarters have been
13
14 located in Oklahoma this state for at least three (3)
14
15 uninterrupted years prior to the date of the
15
16 transaction from which the net capital gains arise.
16
17 G. 1. For purposes of computing its Oklahoma taxable income
17
18 under this section, the dividends-paid deduction otherwise allowed
18
19 by federal law in computing net income of a real estate investment
19
20 trust that is subject to federal income tax shall be added back in
20
21 computing the tax imposed by this state under this title if the real
21
22 estate investment trust is a captive real estate investment trust.
22
23 2. For purposes of computing its Oklahoma taxable income under
23
24 this section, a taxpayer shall add back otherwise deductible rents
24
Req. No. 933 Page 70
1 and interest expenses paid to a captive real estate investment trust
1
2 that is not subject to the provisions of paragraph 1 of this
2
3 subsection. As used in this subsection:
3
4 a. the term "real estate investment trust" or "REIT"
4
5 means the meaning ascribed to such term in Section 856
5
6 of the Internal Revenue Code of 1986, as amended,
6
7 b. the term "captive real estate investment trust" means
7
8 a real estate investment trust, the shares or
8
9 beneficial interests of which are not regularly traded
9
10 on an established securities market and more than
10
11 fifty percent (50%) of the voting power or value of
11
12 the beneficial interests or shares of which are owned
12
13 or controlled, directly or indirectly, or
13
14 constructively, by a single entity that is:
14
15 (1) treated as an association taxable as a
15
16 corporation under the Internal Revenue Code of
16
17 1986, as amended, and
17
18 (2) not exempt from federal income tax pursuant to
18
19 the provisions of Section 501(a) of the Internal
19
20 Revenue Code of 1986, as amended.
20
21 The term shall not include a real estate investment
21
22 trust that is intended to be regularly traded on an
22
23 established securities market, and that satisfies the
23
24 requirements of Section 856(a)(5) and (6) of the U.S.
24
Req. No. 933 Page 71
1 Internal Revenue Code of 1986, as amended, by reason
1
2 of Section 856(h)(2) of the Internal Revenue Code of
2
3 1986, as amended,
3
4 c. the term "association taxable as a corporation" shall
4
5 not include the following entities:
5
6 (1) any real estate investment trust as defined in
6
7 paragraph a of this subsection other than a
7
8 "captive real estate investment trust" captive
8
9 real estate investment trust,
9
10 (2) any qualified real estate investment trust
10
11 subsidiary under Section 856(i) of the Internal
11
12 Revenue Code of 1986, as amended, other than a
12
13 qualified REIT subsidiary of a "captive real
13
14 estate investment trust" captive real estate
14
15 investment trust,
15
16 (3) any Listed Australian Property Trust listed
16
17 Australian property trust (meaning an Australian
17
18 unit trust registered as a "Managed Investment
18
19 Scheme" "managed investment scheme" under the
19
20 Australian Corporations Act 2001 in which the
20
21 principal class of units is listed on a
21
22 recognized stock exchange in Australia and is
22
23 regularly traded on an established securities
23
24 market), or an entity organized as a trust,
24
Req. No. 933 Page 72
1 provided that a Listed Australian Property Trust
1
2 listed Australian property trust owns or
2
3 controls, directly or indirectly, seventy-five
3
4 percent (75%) or more of the voting power or
4
5 value of the beneficial interests or shares of
5
6 such trust, or
6
7 (4) any Qualified Foreign Entity qualified foreign
7
8 entity, meaning a corporation, trust, association
8
9 or partnership organized outside the laws of the
9
10 United States and which satisfies the following
10
11 criteria:
11
12 (a) at least seventy-five percent (75%) of the
12
13 entity's total asset value at the close of
13
14 its taxable year is represented by real
14
15 estate assets, as defined in Section
15
16 856(c)(5)(B) of the Internal Revenue Code of
16
17 1986, as amended, thereby including shares
17
18 or certificates of beneficial interest in
18
19 any real estate investment trust, cash and
19
20 cash equivalents, and U.S. Government
20
21 securities,
21
22 (b) the entity receives a dividend-paid
22
23 deduction comparable to Section 561 of the
23
24
24
Req. No. 933 Page 73
1 Internal Revenue Code of 1986, as amended,
1
2 or is exempt from entity level tax,
2
3 (c) the entity is required to distribute at
3
4 least eighty-five percent (85%) of its
4
5 taxable income, as computed in the
5
6 jurisdiction in which it is organized, to
6
7 the holders of its shares or certificates of
7
8 beneficial interest on an annual basis,
8
9 (d) not more than ten percent (10%) of the
9
10 voting power or value in such entity is held
10
11 directly or indirectly or constructively by
11
12 a single entity or individual, or the shares
12
13 or beneficial interests of such entity are
13
14 regularly traded on an established
14
15 securities market, and
15
16 (e) the entity is organized in a country which
16
17 has a tax treaty with the United States.
17
18 3. For purposes of this subsection, the constructive ownership
18
19 rules of Section 318(a) of the Internal Revenue Code, as modified by
19
20 Section 856(d)(5) of the Internal Revenue Code of 1986, as amended,
20
21 shall apply in determining the ownership of stock, assets, or net
21
22 profits of any person.
22
23 4. A real estate investment trust that does not become
23
24 regularly traded on an established securities market within one (1)
24
Req. No. 933 Page 74
1 year of the date on which it first becomes a real estate investment
1
2 trust shall be deemed not to have been regularly traded on an
2
3 established securities market, retroactive to the date it first
3
4 became a real estate investment trust, and shall file an amended
4
5 return reflecting such retroactive designation for any tax year or
5
6 part year occurring during its initial year of status as a real
6
7 estate investment trust. For purposes of this subsection, a real
7
8 estate investment trust becomes a real estate investment trust on
8
9 the first day it has both met the requirements of Section 856 of the
9
10 Internal Revenue Code of 1986, as amended, and has elected to be
10
11 treated as a real estate investment trust pursuant to Section
11
12 856(c)(1) of the Internal Revenue Code of 1986, as amended.
12
13 SECTION 3. This act shall become effective July 1, 2025.
13
14 SECTION 4. It being immediately necessary for the preservation
14
15 of the public peace, health or safety, an emergency is hereby
15
16 declared to exist, by reason whereof this act shall take effect and
16
17 be in full force from and after its passage and approval.
17
18
18
19 60-1-933 QD 1/19/2025 5:47:05 AM
19
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Req. No. 933 Page 75Every fact on this page links to its source, starting with the official bill record.