Revenue and taxation; Oklahoma Youth Entrepreneurs Promotion and Development Act of 2026; taxable and adjusted gross income; sales tax; sales tax exemptions; business license; effective date.

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ENGROSSED HOUSE
BILL NO. 3548 By: Maynard and Hill of the
House

and

McIntosh of the Senate

[ entrepreneurial experience – Oklahoma Youth
Entrepreneurs Promotion and Development Act of 2026
– exemption – tangible personal property – services
– sole proprietors – business activity – adults –
gross revenue – cap – conducted – exemption –
taxable income – adjusted gross income – exemption
– cap – licensing requirement – noncodification –
codification – effective date ]

BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. NEW LAW A new section of law not to be
codified in the Oklahoma Statutes reads as follows:
This act shall be known and may be cited as the "Oklahoma Youth
Entrepreneurs Promotion and Development Act of 2026".
SECTION 2. AMENDATORY 68 O.S. 2021, Section 1357, as
last amended by Section 1, Chapter 391, O.S.L. 2025 (68 O.S. Supp.
2025, Section 1357), is amended to read as follows:
Section 1357. Exemptions – General.

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There are hereby specifically exempted from the tax levied by
the Oklahoma Sales Tax Code:
1. Transportation of school pupils to and from elementary
schools or high schools in motor or other vehicles;
2. Transportation of persons where the fare of each person does
not exceed One Dollar ($1.00), or local transportation of persons
within the corporate limits of a municipality except by taxicabs;
3. Sales for resale to persons engaged in the business of
reselling the articles purchased, whether within or without the
state, provided that such sales to residents of this state are made
to persons to whom sales tax permits have been issued as provided in
the Oklahoma Sales Tax Code. This exemption shall not apply to the
sales of articles made to persons holding permits when such persons
purchase items for their use and which they are not regularly
engaged in the business of reselling; neither shall this exemption
apply to sales of tangible personal property to peddlers, solicitors
and other salespersons who do not have an established place of
business and a sales tax permit. The exemption provided by this
paragraph shall apply to sales of motor fuel or diesel fuel to a
Group Five vendor, but the use of such motor fuel or diesel fuel by
the Group Five vendor shall not be exempt from the tax levied by the
Oklahoma Sales Tax Code. The purchase of motor fuel or diesel fuel
is exempt from sales tax when the motor fuel is for shipment outside
this state and consumed by a common carrier by rail in the conduct

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of its business. The sales tax shall apply to the purchase of motor
fuel or diesel fuel in Oklahoma by a common carrier by rail when
such motor fuel is purchased for fueling, within this state, of any
locomotive or other motorized flanged wheel equipment;
4. Sales of advertising space in newspapers and periodicals;
5. Sales of programs relating to sporting and entertainment
events, and sales of advertising on billboards (including signage,
posters, panels, marquees or on other similar surfaces, whether
indoors or outdoors) or in programs relating to sporting and
entertainment events, and sales of any advertising, to be displayed
at or in connection with a sporting event, via the Internet,
electronic display devices or through public address or broadcast
systems. The exemption authorized by this paragraph shall be
effective for all sales made on or after January 1, 2001;
6. Sales of any advertising, other than the advertising
described by paragraph 5 of this section, via the Internet,
electronic display devices or through the electronic media including
radio, public address or broadcast systems, television (whether
through closed circuit broadcasting systems or otherwise), and cable
and satellite television, and the servicing of any advertising
devices;
7. Eggs, feed, supplies, machinery, and equipment purchased by
persons regularly engaged in the business of raising worms, fish,
any insect, or any other form of terrestrial or aquatic animal life

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and used for the purpose of raising same for marketing. This
exemption shall only be granted and extended to the purchaser when
the items are to be used and in fact are used in the raising of
animal life as set out above. Each purchaser shall certify, in
writing, on the invoice or sales ticket retained by the vendor that
the purchaser is regularly engaged in the business of raising such
animal life and that the items purchased will be used only in such
business. The vendor shall certify to the Oklahoma Tax Commission
that the price of the items has been reduced to grant the full
benefit of the exemption. Violation hereof by the purchaser or
vendor shall be a misdemeanor;
8. Sale of natural or artificial gas and electricity, and
associated delivery or transmission services, when sold exclusively
for residential use. Provided, this exemption shall not apply to
any sales tax levied by a city or town, or a county or any other
jurisdiction in this state;
9. In addition to the exemptions authorized by Section 1357.6
of this title, sales of drugs sold pursuant to a prescription
written for the treatment of human beings by a person licensed to
prescribe the drugs, and sales of insulin and medical oxygen.
Provided, this exemption shall not apply to over-the-counter drugs;
10. Transfers of title or possession of empty, partially
filled, or filled returnable oil and chemical drums to any person
who is not regularly engaged in the business of selling, reselling

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or otherwise transferring empty, partially filled or filled
returnable oil drums;
11. Sales of one-way utensils, paper napkins, paper cups,
disposable hot containers, and other one-way carry out materials to
a vendor of meals or beverages;
12. Sales of food or food products for home consumption which
are purchased in whole or in part with coupons issued pursuant to
the federal food stamp program as authorized by Sections 2011
through 2036d of Title 7 of the United States Code, as to that
portion purchased with such coupons. The exemption provided for
such sales shall be inapplicable to such sales upon the effective
date of any federal law that removes the requirement of the
exemption as a condition for participation by the state in the
federal food stamp program;
13. Sales of food or food products, or any equipment or
supplies used in the preparation of the food or food products to or
by an organization which:
a. is exempt from taxation pursuant to the provisions of
Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, 26 U.S.C., Section 501(c)(3), and
which provides and delivers prepared meals for home
consumption to elderly or homebound persons as part of
a program commonly known as "Meals on Wheels" or
"Mobile Meals", or

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b. is exempt from taxation pursuant to the provisions of
Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, 26 U.S.C., Section 501(c)(3), and
which receives federal funding pursuant to the Older
Americans Act of 1965, as amended, for the purpose of
providing nutrition programs for the care and benefit
of elderly persons;
14. a. Sales of tangible personal property or services to or
by organizations which are exempt from taxation
pursuant to the provisions of Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended, 26 U.S.C.,
Section 501(c)(3), and:
(1) are primarily involved in the collection and
distribution of food and other household products
to other organizations that facilitate the
distribution of such products to the needy and
such distributee organizations are exempt from
taxation pursuant to the provisions of Section
501(c)(3) of the Internal Revenue Code of 1986,
as amended, 26 U.S.C., Section 501(c)(3), or
(2) facilitate the distribution of such products to
the needy.
b. Sales made in the course of business for profit or
savings, competing with other persons engaged in the

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same or similar business shall not be exempt under
this paragraph;
15. Sales of tangible personal property or services to
children's homes which are located on church-owned property and are
operated by organizations exempt from taxation pursuant to the
provisions of the Internal Revenue Code of 1986, as amended, 26
U.S.C., Section 501(c)(3);
16. Sales of computers, data processing equipment, related
peripherals, and telephone, telegraph or telecommunications service
and equipment for use in a qualified aircraft maintenance or
manufacturing facility. For purposes of this paragraph, "qualified
aircraft maintenance or manufacturing facility" means a new or
expanding facility primarily engaged in aircraft repair, building or
rebuilding, whether or not on a factory basis, whose total cost of
construction exceeds the sum of Five Million Dollars ($5,000,000.00)
and which employs at least two hundred fifty new full-time-
equivalent employees, as certified by the Oklahoma Employment
Security Commission, upon completion of the facility. In order to
qualify for the exemption provided for by this paragraph, the cost
of the items purchased by the qualified aircraft maintenance or
manufacturing facility shall equal or exceed the sum of Two Million
Dollars ($2,000,000.00);
17. Sales of tangible personal property consumed or
incorporated in the construction or expansion of a qualified

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aircraft maintenance or manufacturing facility as defined in
paragraph 16 of this section. For purposes of this paragraph, sales
made to a contractor or subcontractor that has previously entered
into a contractual relationship with a qualified aircraft
maintenance or manufacturing facility for construction or expansion
of such a facility shall be considered sales made to a qualified
aircraft maintenance or manufacturing facility;
18. Sales of the following telecommunications services:
a. interstate and international 800 service. "800
service" means a telecommunications service that
allows a caller to dial a toll-free number without
incurring a charge for the call. The service is
typically marketed under the name "800", "855", "866",
"877" and "888" toll-free calling, and any subsequent
numbers designated by the Federal Communications
Commission,
b. interstate and international 900 service. "900
service" means an inbound toll telecommunications
service purchased by a subscriber that allows the
subscriber's customers to call in to the subscriber's
prerecorded announcement or live service. 900 service
does not include the charge for: collection services
provided by the seller of the telecommunications
services to the subscriber, or service or product sold

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by the subscriber to the subscriber's customer. The
service is typically marketed under the name "900"
service, and any subsequent numbers designated by the
Federal Communications Commission,
c. interstate and international private communications
service. "Private communications service" means a
telecommunications service that entitles the customer
to exclusive or priority use of a communications
channel or group of channels between or among
termination points, regardless of the manner in which
such channel or channels are connected, and includes
switching capacity, extension lines, stations and any
other associated services that are provided in
connection with the use of such channel or channels,
d. value-added nonvoice data service. "Value-added
nonvoice data service" means a service that otherwise
meets the definition of telecommunications services in
which computer processing applications are used to act
on the form, content, code or protocol of the
information or data primarily for a purpose other than
transmission, conveyance, or routing,
e. interstate and international telecommunications
service which is:

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(1) rendered by a company for private use within its
organization, or
(2) used, allocated or distributed by a company to
its affiliated group,
f. regulatory assessments and charges including charges
to fund the Oklahoma Universal Service Fund, the
Oklahoma Lifeline Fund and the Oklahoma High Cost
Fund, and
g. telecommunications nonrecurring charges including but
not limited to the installation, connection, change,
or initiation of telecommunications services which are
not associated with a retail consumer sale;
19. Sales of railroad track spikes manufactured and sold for
use in this state in the construction or repair of railroad tracks,
switches, sidings, and turnouts;
20. Sales of aircraft and aircraft parts provided such sales
occur at a qualified aircraft maintenance facility. As used in this
paragraph, "qualified aircraft maintenance facility" means a
facility operated by an air common carrier including one or more
component overhaul support buildings or structures in an area owned,
leased, or controlled by the air common carrier, at which there were
employed at least two thousand full-time-equivalent employees in the
preceding year as certified by the Oklahoma Employment Security
Commission and which is primarily related to the fabrication,

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repair, alteration, modification, refurbishing, maintenance,
building, or rebuilding of commercial aircraft or aircraft parts
used in air common carriage. For purposes of this paragraph, "air
common carrier" shall also include members of an affiliated group as
defined by Section 1504 of the Internal Revenue Code of 1986, as
amended, 26 U.S.C., Section 1504. Beginning July 1, 2012, the
exemption shall include sales of machinery, tools, supplies,
equipment, and related tangible personal property and services used
or consumed in the repair, remodeling, or maintenance of aircraft,
aircraft engines or aircraft component parts which occur at a
qualified aircraft maintenance facility;
21. Sales of machinery and equipment purchased and used by
persons and establishments primarily engaged in computer services
and data processing:
a. as defined under Industry Group Numbers 7372 and 7373
of the Standard Industrial Classification (SIC)
Manual, latest version, which derive at least fifty
percent (50%) of their annual gross revenues from the
sale of a product or service to an out-of-state buyer
or consumer, and
b. as defined under Industry Group Number 7374 of the SIC
Manual, latest version, which derive at least eighty
percent (80%) of their annual gross revenues from the

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sale of a product or service to an out-of-state buyer
or consumer.
Eligibility for the exemption set out in this paragraph shall be
established, subject to review by the Tax Commission, by annually
filing an affidavit with the Tax Commission stating that the
facility so qualifies and such information as required by the Tax
Commission. For purposes of determining whether annual gross
revenues are derived from sales to out-of-state buyers or consumers,
all sales to the federal government shall be considered to be to an
out-of-state buyer or consumer;
22. Sales of prosthetic devices to an individual for use by
such individual. For purposes of this paragraph, "prosthetic
device" shall have the same meaning as provided in Section 1357.6 of
this title, but shall not include corrective eye glasses, contact
lenses, or hearing aids;
23. Sales of tangible personal property or services to a motion
picture or television production company to be used or consumed in
connection with an eligible production. For purposes of this
paragraph, "eligible production" means a documentary, special, music
video or a television commercial or television program that will
serve as a pilot for or be a segment of an ongoing dramatic or
situation comedy series filmed or taped for network or national or
regional syndication or a feature-length motion picture intended for
theatrical release or for network or national or regional

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syndication or broadcast. The provisions of this paragraph shall
apply to sales occurring on or after July 1, 1996. In order to
qualify for the exemption, the motion picture or television
production company shall file any documentation and information
required to be submitted pursuant to rules promulgated by the Tax
Commission;
24. Sales of diesel fuel sold for consumption by commercial
vessels, barges and other commercial watercraft;
25. Sales of tangible personal property or services to tax-
exempt independent nonprofit biomedical research foundations that
provide educational programs for Oklahoma science students and
teachers and to tax-exempt independent nonprofit community blood
banks headquartered in this state;
26. Effective May 6, 1992, sales of wireless telecommunications
equipment to a vendor who subsequently transfers the equipment at no
charge or for a discounted charge to a consumer as part of a
promotional package or as an inducement to commence or continue a
contract for wireless telecommunications services;
27. Effective January 1, 1991, leases of rail transportation
cars to haul coal to coal-fired plants located in this state which
generate electric power;
28. Beginning July 1, 2005, sales of aircraft engine repairs,
modification, and replacement parts, sales of aircraft frame repairs
and modification, aircraft interior modification, and paint, and

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sales of services employed in the repair, modification, and
replacement of parts of aircraft engines, aircraft frame and
interior repair and modification, and paint;
29. Sales of materials and supplies to the owner or operator of
a ship, motor vessel, or barge that is used in interstate or
international commerce if the materials and supplies:
a. are loaded on the ship, motor vessel, or barge and
used in the maintenance and operation of the ship,
motor vessel, or barge, or
b. enter into and become component parts of the ship,
motor vessel, or barge;
30. Sales of tangible personal property made at estate sales at
which such property is offered for sale on the premises of the
former residence of the decedent by a person who is not required to
be licensed pursuant to the Transient Merchant Licensing Act, or who
is not otherwise required to obtain a sales tax permit for the sale
of such property pursuant to the provisions of Section 1364 of this
title; provided:
a. such sale or event may not be held for a period
exceeding three (3) consecutive days,
b. the sale must be conducted within six (6) months of
the date of death of the decedent, and

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c. the exemption allowed by this paragraph shall not be
allowed for property that was not part of the
decedent's estate;
31. Beginning January 1, 2004, sales of electricity and
associated delivery and transmission services, when sold exclusively
for use by an oil and gas operator for reservoir dewatering projects
and associated operations commencing on or after July 1, 2003, in
which the initial water-to-oil ratio is greater than or equal to
five-to-one water-to-oil, and such oil and gas development projects
have been classified by the Corporation Commission as a reservoir
dewatering unit;
32. Sales of prewritten computer software that is delivered
electronically. For purposes of this paragraph, "delivered
electronically" means delivered to the purchaser by means other than
tangible storage media;
33. Sales of modular dwelling units when built at a production
facility and moved in whole or in parts, to be assembled on-site,
and permanently affixed to the real property and used for
residential or commercial purposes. The exemption provided by this
paragraph shall equal forty-five percent (45%) of the total sales
price of the modular dwelling unit. For purposes of this paragraph,
"modular dwelling unit" means a structure that is not subject to the
motor vehicle excise tax imposed pursuant to Section 2103 of this
title;

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34. Sales of tangible personal property or services to:
a. persons who are residents of Oklahoma and have been
honorably discharged from active service in any branch
of the Armed Forces of the United States or Oklahoma
National Guard and who have been certified by the
United States Department of Veterans Affairs or its
successor to be in receipt of disability compensation
at the one-hundred-percent rate and the disability
shall be permanent and have been sustained through
military action or accident or resulting from disease
contracted while in such active service and registered
with the veterans registry created by the Oklahoma
Department of Veterans Affairs, or
b. the surviving spouse of the person in subparagraph a
of this paragraph if the person is deceased and the
spouse has not remarried and the surviving spouse of a
person who is determined by the United States
Department of Defense or any branch of the United
States military to have died while in the line of duty
if the spouse has not remarried. Sales for the
benefit of an eligible person to a spouse of the
eligible person or to a member of the household in
which the eligible person resides and who is
authorized to make purchases on the person's behalf,

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when such eligible person is not present at the sale,
shall also be exempt for purposes of this paragraph.
The Oklahoma Tax Commission shall issue a separate
exemption card to a spouse of an eligible person or to
a member of the household in which the eligible person
resides who is authorized to make purchases on the
person's behalf, if requested by the eligible person.
Sales qualifying for the exemption authorized by this
paragraph shall not exceed Twenty-five Thousand
Dollars ($25,000.00) per year per individual while the
disabled veteran is living. Sales qualifying for the
exemption authorized by this paragraph shall not
exceed One Thousand Dollars ($1,000.00) per year for
an unremarried surviving spouse. Upon request of the
Tax Commission, a person asserting or claiming the
exemption authorized by this paragraph shall provide a
statement, executed under oath, that the total sales
amounts for which the exemption is applicable have not
exceeded Twenty-five Thousand Dollars ($25,000.00) per
year per living disabled veteran or One Thousand
Dollars ($1,000.00) per year for an unremarried
surviving spouse. If the amount of such exempt sales
exceeds such amount, the sales tax in excess of the
authorized amount shall be treated as a direct sales

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tax liability and may be recovered by the Tax
Commission in the same manner provided by law for
other taxes including penalty and interest. The Tax
Commission shall promulgate any rules necessary to
implement the provisions of this paragraph, which
shall include rules providing for the disclosure of
information about persons eligible for the exemption
authorized in this paragraph to the Oklahoma
Department of Veterans Affairs, as authorized in
Section 205 of this title. For purposes of the
exemption authorized by this subparagraph, if the
disability determination that would have been made
while the disabled veteran was still living is not
made final until after the death of the disabled
veteran, the exemption authorized by this subparagraph
may still be claimed by the surviving spouse;
35. Sales of electricity to the operator, specifically
designated by the Corporation Commission, of a spacing unit or lease
from which oil is produced or attempted to be produced using
enhanced recovery methods including, but not limited to, increased
pressure in a producing formation through the use of water or
saltwater if the electrical usage is associated with and necessary
for the operation of equipment required to inject or circulate
fluids in a producing formation for the purpose of forcing oil or

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petroleum into a wellbore for eventual recovery and production from
the wellhead. In order to be eligible for the sales tax exemption
authorized by this paragraph, the total content of oil recovered
after the use of enhanced recovery methods shall not exceed one
percent (1%) by volume. The exemption authorized by this paragraph
shall be applicable only to the state sales tax rate and shall not
be applicable to any county or municipal sales tax rate;
36. Sales of intrastate charter and tour bus transportation.
As used in this paragraph, "intrastate charter and tour bus
transportation" means the transportation of persons from one
location in this state to another location in this state in a motor
vehicle which has been constructed in such a manner that it may
lawfully carry more than eighteen persons, and which is ordinarily
used or rented to carry persons for compensation. Provided, this
exemption shall not apply to regularly scheduled bus transportation
for the general public;
37. Sales of vitamins, minerals, and dietary supplements by a
licensed chiropractor to a person who is the patient of such
chiropractor at the physical location where the chiropractor
provides chiropractic care or services to such patient. The
provisions of this paragraph shall not be applicable to any drug,
medicine, or substance for which a prescription by a licensed
physician is required;

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38. Sales of goods, wares, merchandise, tangible personal
property, machinery, and equipment to a web search portal located in
this state which derives at least eighty percent (80%) of its annual
gross revenue from the sale of a product or service to an out-of-
state buyer or consumer. For purposes of this paragraph, "web
search portal" means an establishment classified under North
American Industry Classification System (NAICS) code 519130 which
operates websites that use a search engine to generate and maintain
extensive databases of Internet addresses and content in an easily
searchable format;
39. Sales of tangible personal property consumed or
incorporated in the construction or expansion of a facility for a
corporation organized under Section 437 et seq. of Title 18 of the
Oklahoma Statutes as a rural electric cooperative. For purposes of
this paragraph, sales made to a contractor or subcontractor that has
previously entered into a contractual relationship with a rural
electric cooperative for construction or expansion of a facility
shall be considered sales made to a rural electric cooperative;
40. Sales of tangible personal property or services to a
business primarily engaged in the repair of consumer electronic
goods including, but not limited to, cell phones, compact disc
players, personal computers, MP3 players, digital devices for the
storage and retrieval of information through hard-wired or wireless
computer or Internet connections, if the devices are sold to the

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business by the original manufacturer of such devices and the
devices are repaired, refitted or refurbished for sale by the entity
qualifying for the exemption authorized by this paragraph directly
to retail consumers or if the devices are sold to another business
entity for sale to retail consumers;
41. On or after July 1, 2019, and prior to July 1, 2024, sales
or leases of rolling stock when sold or leased by the manufacturer,
regardless of whether the purchaser is a public services corporation
engaged in business as a common carrier of property or passengers by
railway, for use or consumption by a common carrier directly in the
rendition of public service. For purposes of this paragraph,
"rolling stock" means locomotives, autocars, and railroad cars and
"sales or leases" includes railroad car maintenance and retrofitting
of railroad cars for their further use only on the railways;
42. Sales of gold, silver, platinum, palladium or other bullion
items such as coins and bars and legal tender of any nation, which
legal tender is sold according to its value as precious metal or as
an investment. As used in the paragraph, "bullion" means any
precious metal including, but not limited to, gold, silver,
platinum, and palladium, that is in such a state or condition that
its value depends upon its precious metal content and not its form.
The exemption authorized by this paragraph shall not apply to
fabricated metals that have been processed or manufactured for
artistic use or as jewelry;

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43. Recovery fees on the rental charge from any item of heavy
equipment property rental as provided for in Section 2807.11 of this
title; and
44. Sales of firearm safety devices and gun safety devices. As
used in this paragraph:
a. "firearm safety device" means a gun safe, gun case,
gun lock box, trigger lock, barrel lock, or other
device that is designed to be used to store a firearm
and that is designed to be unlocked only by means of a
key, combination, or other similar means, and
b. "gun safety device" means any integral device to be
equipped or installed on a firearm that permits a user
to program the firearm to operate only for specified
persons designated by the user through computerized
locking devices or other means integral to and
permanently part of the firearm; and
45. Sales of tangible personal property or services made by a
business that is owned and operated primarily by one or more
individuals who have not attained eighteen (18) years of age,
conducting such business as a sole proprietorship and not through
any other legal entity, shall be exempt from the tax levied by the
Oklahoma Sales Tax Code, so long as:
a. the business receives only limited assistance from
adults in the form of supervision, transportation,

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safety oversight, or other incidental support that
does not constitute material management or operation
of the business,
b. the business generates gross revenue of less than One
Thousand Dollars ($1,000.00) during the calendar year,
and
c. the business operates only on private property with
the consent of the owner or lawful possessor of the
property, or as part of a community event that
separately registers youth vendors.
This exemption shall not apply if an adult exercises primary
control over the business decisions, management, or operations, or
if the business is materially operated for the benefit of any adult.
SECTION 3. AMENDATORY 68 O.S. 2021, Section 2358, as
last amended by Section 1, Chapter 166, O.S.L. 2024 (68 O.S. Supp.
2025, Section 2358), is amended to read as follows:
Section 2358. For all tax years beginning after December 31,
1981, taxable income and adjusted gross income shall be adjusted to
arrive at Oklahoma taxable income and Oklahoma adjusted gross income
as required by this section.
A. The taxable income of any taxpayer shall be adjusted to
arrive at Oklahoma taxable income for corporations and Oklahoma
adjusted gross income for individuals, as follows:

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1. There shall be added interest income on obligations of any
state or political subdivision thereto which is not otherwise
exempted pursuant to other laws of this state, to the extent that
such interest is not included in taxable income and adjusted gross
income.
2. There shall be deducted amounts included in such income that
the state is prohibited from taxing because of the provisions of the
Federal Constitution, the State Constitution, federal laws or laws
of Oklahoma.
3. The amount of any federal net operating loss deduction shall
be adjusted as follows:
a. For carryovers and carrybacks to taxable years
beginning before January 1, 1981, the amount of any
net operating loss deduction allowed to a taxpayer for
federal income tax purposes shall be reduced to an
amount which is the same portion thereof as the loss
from sources within this state, as determined pursuant
to this section and Section 2362 of this title, for
the taxable year in which such loss is sustained is of
the total loss for such year;
b. For carryovers and carrybacks to taxable years
beginning after December 31, 1980, the amount of any
net operating loss deduction allowed for the taxable
year shall be an amount equal to the aggregate of the

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Oklahoma net operating loss carryovers and carrybacks
to such year. Oklahoma net operating losses shall be
separately determined by reference to Section 172 of
the Internal Revenue Code, 26 U.S.C., Section 172, as
modified by the Oklahoma Income Tax Act, Section 2351
et seq. of this title, and shall be allowed without
regard to the existence of a federal net operating
loss. For tax years beginning after December 31,
2000, and ending before January 1, 2008, the years to
which such losses may be carried shall be determined
solely by reference to Section 172 of the Internal
Revenue Code, 26 U.S.C., Section 172, with the
exception that the terms "net operating loss" and
"taxable income" shall be replaced with "Oklahoma net
operating loss" and "Oklahoma taxable income". For
tax years beginning after December 31, 2007, and
ending before January 1, 2009, years to which such
losses may be carried back shall be limited to two (2)
years. For tax years beginning after December 31,
2008, the years to which such losses may be carried
back shall be determined solely by reference to
Section 172 of the Internal Revenue Code, 26 U.S.C.,
Section 172, with the exception that the terms "net
operating loss" and "taxable income" shall be replaced

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with "Oklahoma net operating loss" and "Oklahoma
taxable income".
4. Items of the following nature shall be allocated as
indicated. Allowable deductions attributable to items separately
allocable in subparagraphs a, b and c of this paragraph, whether or
not such items of income were actually received, shall be allocated
on the same basis as those items:
a. Income from real and tangible personal property, such
as rents, oil and mining production or royalties, and
gains or losses from sales of such property, shall be
allocated in accordance with the situs of such
property;
b. Income from intangible personal property, such as
interest, dividends, patent or copyright royalties,
and gains or losses from sales of such property, shall
be allocated in accordance with the domiciliary situs
of the taxpayer, except that:
(1) where such property has acquired a nonunitary
business or commercial situs apart from the
domicile of the taxpayer such income shall be
allocated in accordance with such business or
commercial situs; interest income from
investments held to generate working capital for
a unitary business enterprise shall be included

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in apportionable income; a resident trust or
resident estate shall be treated as having a
separate commercial or business situs insofar as
undistributed income is concerned, but shall not
be treated as having a separate commercial or
business situs insofar as distributed income is
concerned,
(2) for taxable years beginning after December 31,
2003, capital or ordinary gains or losses from
the sale of an ownership interest in a publicly
traded partnership, as defined by Section 7704(b)
of the Internal Revenue Code, shall be allocated
to this state in the ratio of the original cost
of such partnership's tangible property in this
state to the original cost of such partnership's
tangible property everywhere, as determined at
the time of the sale; if more than fifty percent
(50%) of the value of the partnership's assets
consists of intangible assets, capital or
ordinary gains or losses from the sale of an
ownership interest in the partnership shall be
allocated to this state in accordance with the
sales factor of the partnership for its first
full tax period immediately preceding its tax

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period during which the ownership interest in the
partnership was sold; the provisions of this
division shall only apply if the capital or
ordinary gains or losses from the sale of an
ownership interest in a partnership do not
constitute qualifying gain receiving capital
treatment as defined in subparagraph a of
paragraph 2 of subsection F of this section,
(3) income from such property which is required to be
allocated pursuant to the provisions of paragraph
5 of this subsection shall be allocated as herein
provided;
c. Net income or loss from a business activity which is
not a part of business carried on within or without
the state of a unitary character shall be separately
allocated to the state in which such activity is
conducted;
d. In the case of a manufacturing or processing
enterprise the business of which in this state
consists solely of marketing its products by:
(1) sales having a situs without this state, shipped
directly to a point from without the state to a
purchaser within the state, commonly known as
interstate sales,

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(2) sales of the product stored in public warehouses
within the state pursuant to "in transit"
tariffs, as prescribed and allowed by the
Interstate Commerce Commission, to a purchaser
within the state,
(3) sales of the product stored in public warehouses
within the state where the shipment to such
warehouses is not covered by "in transit"
tariffs, as prescribed and allowed by the
Interstate Commerce Commission, to a purchaser
within or without the state,
the Oklahoma net income shall, at the option of the
taxpayer, be that portion of the total net income of
the taxpayer for federal income tax purposes derived
from the manufacture and/or processing and sales
everywhere as determined by the ratio of the sales
defined in this section made to the purchaser within
the state to the total sales everywhere. The term
"public warehouse" as used in this subparagraph means
a licensed public warehouse, the principal business of
which is warehousing merchandise for the public;
e. In the case of insurance companies, Oklahoma taxable
income shall be taxable income of the taxpayer for
federal tax purposes, as adjusted for the adjustments

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provided pursuant to the provisions of paragraphs 1
and 2 of this subsection, apportioned as follows:
(1) except as otherwise provided by division (2) of
this subparagraph, taxable income of an insurance
company for a taxable year shall be apportioned
to this state by multiplying such income by a
fraction, the numerator of which is the direct
premiums written for insurance on property or
risks in this state, and the denominator of which
is the direct premiums written for insurance on
property or risks everywhere. For purposes of
this subsection, the term "direct premiums
written" means the total amount of direct
premiums written, assessments and annuity
considerations as reported for the taxable year
on the annual statement filed by the company with
the Insurance Commissioner in the form approved
by the National Association of Insurance
Commissioners, or such other form as may be
prescribed in lieu thereof,
(2) if the principal source of premiums written by an
insurance company consists of premiums for
reinsurance accepted by it, the taxable income of
such company shall be apportioned to this state

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by multiplying such income by a fraction, the
numerator of which is the sum of (a) direct
premiums written for insurance on property or
risks in this state, plus (b) premiums written
for reinsurance accepted in respect of property
or risks in this state, and the denominator of
which is the sum of (c) direct premiums written
for insurance on property or risks everywhere,
plus (d) premiums written for reinsurance
accepted in respect of property or risks
everywhere. For purposes of this paragraph,
premiums written for reinsurance accepted in
respect of property or risks in this state,
whether or not otherwise determinable, may at the
election of the company be determined on the
basis of the proportion which premiums written
for insurance accepted from companies
commercially domiciled in this state bears to
premiums written for reinsurance accepted from
all sources, or alternatively in the proportion
which the sum of the direct premiums written for
insurance on property or risks in this state by
each ceding company from which reinsurance is
accepted bears to the sum of the total direct

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premiums written by each such ceding company for
the taxable year.
5. The net income or loss remaining after the separate
allocation in paragraph 4 of this subsection, being that which is
derived from a unitary business enterprise, shall be apportioned to
this state on the basis of the arithmetical average of three factors
consisting of property, payroll and sales or gross revenue
enumerated as subparagraphs a, b and c of this paragraph. Net
income or loss as used in this paragraph includes that derived from
patent or copyright royalties, purchase discounts, and interest on
accounts receivable relating to or arising from a business activity,
the income from which is apportioned pursuant to this subsection,
including the sale or other disposition of such property and any
other property used in the unitary enterprise. Deductions used in
computing such net income or loss shall not include taxes based on
or measured by income. Provided, for corporations whose property
for purposes of the tax imposed by Section 2355 of this title has an
initial investment cost equaling or exceeding Two Hundred Million
Dollars ($200,000,000.00) and such investment is made on or after
July 1, 1997, or for corporations which expand their property or
facilities in this state and such expansion has an investment cost
equaling or exceeding Two Hundred Million Dollars ($200,000,000.00)
over a period not to exceed three (3) years, and such expansion is
commenced on or after January 1, 2000, the three factors shall be

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apportioned with property and payroll, each comprising twenty-five
percent (25%) of the apportionment factor and sales comprising fifty
percent (50%) of the apportionment factor. The apportionment
factors shall be computed as follows:
a. The property factor is a fraction, the numerator of
which is the average value of the taxpayer's real and
tangible personal property owned or rented and used in
this state during the tax period and the denominator
of which is the average value of all the taxpayer's
real and tangible personal property everywhere owned
or rented and used during the tax period.
(1) Property, the income from which is separately
allocated in paragraph 4 of this subsection,
shall not be included in determining this
fraction. The numerator of the fraction shall
include a portion of the investment in
transportation and other equipment having no
fixed situs, such as rolling stock, buses, trucks
and trailers, including machinery and equipment
carried thereon, airplanes, salespersons'
automobiles and other similar equipment, in the
proportion that miles traveled in this state by
such equipment bears to total miles traveled,

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(2) Property owned by the taxpayer is valued at its
original cost. Property rented by the taxpayer
is valued at eight times the net annual rental
rate. Net annual rental rate is the annual
rental rate paid by the taxpayer, less any annual
rental rate received by the taxpayer from
subrentals,
(3) The average value of property shall be determined
by averaging the values at the beginning and
ending of the tax period but the Oklahoma Tax
Commission may require the averaging of monthly
values during the tax period if reasonably
required to reflect properly the average value of
the taxpayer's property;
b. The payroll factor is a fraction, the numerator of
which is the total compensation for services rendered
in the state during the tax period, and the
denominator of which is the total compensation for
services rendered everywhere during the tax period.
"Compensation", as used in this subsection, means
those paid-for services to the extent related to the
unitary business but does not include officers'
salaries, wages and other compensation.

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(1) In the case of a transportation enterprise, the
numerator of the fraction shall include a portion
of such expenditure in connection with employees
operating equipment over a fixed route, such as
railroad employees, airline pilots, or bus
drivers, in this state only a part of the time,
in the proportion that mileage traveled in this
state bears to total mileage traveled by such
employees,
(2) In any case the numerator of the fraction shall
include a portion of such expenditures in
connection with itinerant employees, such as
traveling salespersons, in this state only a part
of the time, in the proportion that time spent in
this state bears to total time spent in
furtherance of the enterprise by such employees;
c. The sales factor is a fraction, the numerator of which
is the total sales or gross revenue of the taxpayer in
this state during the tax period, and the denominator
of which is the total sales or gross revenue of the
taxpayer everywhere during the tax period. "Sales",
as used in this subsection, does not include sales or
gross revenue which are separately allocated in
paragraph 4 of this subsection.

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(1) Sales of tangible personal property have a situs
in this state if the property is delivered or
shipped to a purchaser other than the United
States government, within this state regardless
of the FOB point or other conditions of the sale;
or the property is shipped from an office, store,
warehouse, factory or other place of storage in
this state and (a) the purchaser is the United
States government or (b) the taxpayer is not
doing business in the state of the destination of
the shipment.
(2) In the case of a railroad or interurban railway
enterprise, the numerator of the fraction shall
not be less than the allocation of revenues to
this state as shown in its annual report to the
Corporation Commission.
(3) In the case of an airline, truck or bus
enterprise or freight car, tank car, refrigerator
car or other railroad equipment enterprise, the
numerator of the fraction shall include a portion
of revenue from interstate transportation in the
proportion that interstate mileage traveled in
this state bears to total interstate mileage
traveled.

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(4) In the case of an oil, gasoline or gas pipeline
enterprise, the numerator of the fraction shall
be either the total of traffic units of the
enterprise within this state or the revenue
allocated to this state based upon miles moved,
at the option of the taxpayer, and the
denominator of which shall be the total of
traffic units of the enterprise or the revenue of
the enterprise everywhere as appropriate to the
numerator. A "traffic unit" is hereby defined as
the transportation for a distance of one (1) mile
of one (1) barrel of oil, one (1) gallon of
gasoline or one thousand (1,000) cubic feet of
natural or casinghead gas, as the case may be.
(5) In the case of a telephone or telegraph or other
communication enterprise, the numerator of the
fraction shall include that portion of the
interstate revenue as is allocated pursuant to
the accounting procedures prescribed by the
Federal Communications Commission; provided that
in respect to each corporation or business entity
required by the Federal Communications Commission
to keep its books and records in accordance with
a uniform system of accounts prescribed by such

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Commission, the intrastate net income shall be
determined separately in the manner provided by
such uniform system of accounts and only the
interstate income shall be subject to allocation
pursuant to the provisions of this subsection.
Provided further, that the gross revenue factors
shall be those as are determined pursuant to the
accounting procedures prescribed by the Federal
Communications Commission.
In any case where the apportionment of the three factors
prescribed in this paragraph attributes to this state a portion of
net income of the enterprise out of all appropriate proportion to
the property owned and/or business transacted within this state,
because of the fact that one or more of the factors so prescribed
are not employed to any appreciable extent in furtherance of the
enterprise; or because one or more factors not so prescribed are
employed to a considerable extent in furtherance of the enterprise;
or because of other reasons, the Tax Commission is empowered to
permit, after a showing by taxpayer that an excessive portion of net
income has been attributed to this state, or require, when in its
judgment an insufficient portion of net income has been attributed
to this state, the elimination, substitution, or use of additional
factors, or reduction or increase in the weight of such prescribed
factors. Provided, however, that any such variance from such

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prescribed factors which has the effect of increasing the portion of
net income attributable to this state must not be inherently
arbitrary, and application of the recomputed final apportionment to
the net income of the enterprise must attribute to this state only a
reasonable portion thereof.
6. For calendar years 1997 and 1998, the owner of a new or
expanded agricultural commodity processing facility in this state
may exclude from Oklahoma taxable income, or in the case of an
individual, the Oklahoma adjusted gross income, fifteen percent
(15%) of the investment by the owner in the new or expanded
agricultural commodity processing facility. For calendar year 1999,
and all subsequent years, the percentage, not to exceed fifteen
percent (15%), available to the owner of a new or expanded
agricultural commodity processing facility in this state claiming
the exemption shall be adjusted annually so that the total estimated
reduction in tax liability does not exceed One Million Dollars
($1,000,000.00) annually. The Tax Commission shall promulgate rules
for determining the percentage of the investment which each eligible
taxpayer may exclude. The exclusion provided by this paragraph
shall be taken in the taxable year when the investment is made. In
the event the total reduction in tax liability authorized by this
paragraph exceeds One Million Dollars ($1,000,000.00) in any
calendar year, the Tax Commission shall permit any excess over One
Million Dollars ($1,000,000.00) and shall factor such excess into

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the percentage for subsequent years. Any amount of the exemption
permitted to be excluded pursuant to the provisions of this
paragraph but not used in any year may be carried forward as an
exemption from income pursuant to the provisions of this paragraph
for a period not exceeding six (6) years following the year in which
the investment was originally made.
For purposes of this paragraph:
a. "Agricultural commodity processing facility" means
buildings, structures, fixtures and improvements used
or operated primarily for the processing or production
of marketable products from agricultural commodities.
The term shall also mean a dairy operation that
requires a depreciable investment of at least Two
Hundred Fifty Thousand Dollars ($250,000.00) and which
produces milk from dairy cows. The term does not
include a facility that provides only, and nothing
more than, storage, cleaning, drying or transportation
of agricultural commodities, and
b. "Facility" means each part of the facility which is
used in a process primarily for:
(1) the processing of agricultural commodities,
including receiving or storing agricultural
commodities, or the production of milk at a dairy
operation,

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(2) transporting the agricultural commodities or
product before, during or after the processing,
or
(3) packaging or otherwise preparing the product for
sale or shipment.
7. Despite any provision to the contrary in paragraph 3 of this
subsection, for taxable years beginning after December 31, 1999, in
the case of a taxpayer which has a farming loss, such farming loss
shall be considered a net operating loss carryback in accordance
with and to the extent of the Internal Revenue Code, 26 U.S.C.,
Section 172(b)(G). However, the amount of the net operating loss
carryback shall not exceed the lesser of:
a. Sixty Thousand Dollars ($60,000.00), or
b. the loss properly shown on Schedule F of the Internal
Revenue Service Form 1040 reduced by one-half (1/2) of
the income from all other sources other than reflected
on Schedule F.
8. In taxable years beginning after December 31, 1995, all
qualified wages equal to the federal income tax credit set forth in
26 U.S.C.A., Section 45A, shall be deducted from taxable income.
The deduction allowed pursuant to this paragraph shall only be
permitted for the tax years in which the federal tax credit pursuant
to 26 U.S.C.A., Section 45A, is allowed. For purposes of this

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paragraph, "qualified wages" means those wages used to calculate the
federal credit pursuant to 26 U.S.C.A., Section 45A.
9. In taxable years beginning after December 31, 2005, an
employer that is eligible for and utilizes the Safety Pays OSHA
Consultation Service provided by the Oklahoma Department of Labor
shall receive an exemption from taxable income in the amount of One
Thousand Dollars ($1,000.00) for the tax year that the service is
utilized.
10. For taxable years beginning on or after January 1, 2010,
there shall be added to Oklahoma taxable income an amount equal to
the amount of deferred income not included in such taxable income
pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986
as amended by Section 1231 of the American Recovery and Reinvestment
Act of 2009 (P.L. No. 111-5). There shall be subtracted from
Oklahoma taxable income an amount equal to the amount of deferred
income included in such taxable income pursuant to Section 108(i)(1)
of the Internal Revenue Code by Section 1231 of the American
Recovery and Reinvestment Act of 2009 (P.L. No. 111-5).
11. For taxable years beginning on or after January 1, 2019,
there shall be subtracted from Oklahoma taxable income or adjusted
gross income any item of income or gain, and there shall be added to
Oklahoma taxable income or adjusted gross income any item of loss or
deduction that in the absence of an election pursuant to the
provisions of the Pass-Through Entity Tax Equity Act of 2019 would

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be allocated to a member or to an indirect member of an electing
pass-through entity pursuant to Section 2351 et seq. of this title,
if (i) the electing pass-through entity has accounted for such item
in computing its Oklahoma net entity income or loss pursuant to the
provisions of the Pass-Through Entity Tax Equity Act of 2019, and
(ii) the total amount of tax attributable to any resulting Oklahoma
net entity income has been paid. The Oklahoma Tax Commission shall
promulgate rules for the reporting of such exclusion to direct and
indirect members of the electing pass-through entity. As used in
this paragraph, "electing pass-through entity", "indirect member",
and "member" shall be defined in the same manner as prescribed by
Section 2355.1P-2 of this title. Notwithstanding the application of
this paragraph, the adjusted tax basis of any ownership interest in
a pass-through entity for purposes of Section 2351 et seq. of this
title shall be equal to its adjusted tax basis for federal income
tax purposes.
12. For tax year 2025 and subsequent tax years, an employer
providing paid leave to an employee for the purpose of volunteering
as a poll worker with a county election board in this state shall
receive an exemption from taxable income in the amount of One
Hundred Dollars ($100.00) for each day of leave provided in the tax
year. The employer shall provide documentation from the applicable
county election board showing the employee volunteered, upon request
of the Oklahoma Tax Commission.

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B. 1. The taxable income of any corporation shall be further
adjusted to arrive at Oklahoma taxable income, except those
corporations electing treatment as provided in subchapter S of the
Internal Revenue Code, 26 U.S.C., Section 1361 et seq., and Section
2365 of this title, deductions pursuant to the provisions of the
Accelerated Cost Recovery System as defined and allowed in the
Economic Recovery Tax Act of 1981, Public Law 97-34, 26 U.S.C.,
Section 168, for depreciation of assets placed into service after
December 31, 1981, shall not be allowed in calculating Oklahoma
taxable income. Such corporations shall be allowed a deduction for
depreciation of assets placed into service after December 31, 1981,
in accordance with provisions of the Internal Revenue Code, 26
U.S.C., Section 1 et seq., in effect immediately prior to the
enactment of the Accelerated Cost Recovery System. The Oklahoma tax
basis for all such assets placed into service after December 31,
1981, calculated in this section shall be retained and utilized for
all Oklahoma income tax purposes through the final disposition of
such assets.
Notwithstanding any other provisions of the Oklahoma Income Tax
Act, Section 2351 et seq. of this title, or of the Internal Revenue
Code to the contrary, this subsection shall control calculation of
depreciation of assets placed into service after December 31, 1981,
and before January 1, 1983.

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For assets placed in service and held by a corporation in which
the Accelerated Cost Recovery System was previously disallowed, an
adjustment to taxable income is required in the first taxable year
beginning after December 31, 1982, to reconcile the basis of such
assets to the basis allowed in the Internal Revenue Code. The
purpose of this adjustment is to equalize the basis and allowance
for depreciation accounts between that reported to the Internal
Revenue Service and that reported to this state.
2. For tax years beginning on or after January 1, 2009, and
ending on or before December 31, 2009, there shall be added to
Oklahoma taxable income any amount in excess of One Hundred Seventy-
five Thousand Dollars ($175,000.00) which has been deducted as a
small business expense under Internal Revenue Code, Section 179 as
provided in the American Recovery and Reinvestment Act of 2009.
C. 1. For taxable years beginning after December 31, 1987, the
taxable income of any corporation shall be further adjusted to
arrive at Oklahoma taxable income for transfers of technology to
qualified small businesses located in this state. Such transferor
corporation shall be allowed an exemption from taxable income of an
amount equal to the amount of royalty payment received as a result
of such transfer; provided, however, such amount shall not exceed
ten percent (10%) of the amount of gross proceeds received by such
transferor corporation as a result of the technology transfer. Such
exemption shall be allowed for a period not to exceed ten (10) years

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from the date of receipt of the first royalty payment accruing from
such transfer. No exemption may be claimed for transfers of
technology to qualified small businesses made prior to January 1,
1988.
2. For purposes of this subsection:
a. "Qualified small business" means an entity, whether
organized as a corporation, partnership, or
proprietorship, organized for profit with its
principal place of business located within this state
and which meets the following criteria:
(1) Capitalization of not more than Two Hundred Fifty
Thousand Dollars ($250,000.00),
(2) Having at least fifty percent (50%) of its
employees and assets located in this state at the
time of the transfer, and
(3) Not a subsidiary or affiliate of the transferor
corporation;
b. "Technology" means a proprietary process, formula,
pattern, device or compilation of scientific or
technical information which is not in the public
domain;
c. "Transferor corporation" means a corporation which is
the exclusive and undisputed owner of the technology
at the time the transfer is made; and

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d. "Gross proceeds" means the total amount of
consideration for the transfer of technology, whether
the consideration is in money or otherwise.
D. 1. For taxable years beginning after December 31, 2005, the
taxable income of any corporation, estate or trust, shall be further
adjusted for qualifying gains receiving capital treatment. Such
corporations, estates or trusts shall be allowed a deduction from
Oklahoma taxable income for the amount of qualifying gains receiving
capital treatment earned by the corporation, estate or trust during
the taxable year and included in the federal taxable income of such
corporation, estate or trust.
2. As used in this subsection:
a. "qualifying gains receiving capital treatment" means
the amount of net capital gains, as defined in Section
1222(11) of the Internal Revenue Code, included in the
federal income tax return of the corporation, estate
or trust that result from:
(1) the sale of real property or tangible personal
property located within this state that has been
directly or indirectly owned by the corporation,
estate or trust for a holding period of at least
five (5) years prior to the date of the
transaction from which such net capital gains
arise,

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(2) the sale of stock or on the sale of an ownership
interest in an Oklahoma company, limited
liability company, or partnership where such
stock or ownership interest has been directly or
indirectly owned by the corporation, estate or
trust for a holding period of at least three (3)
years prior to the date of the transaction from
which the net capital gains arise, or
(3) the sale of real property, tangible personal
property or intangible personal property located
within this state as part of the sale of all or
substantially all of the assets of an Oklahoma
company, limited liability company, or
partnership where such property has been directly
or indirectly owned by such entity owned by the
owners of such entity, and used in or derived
from such entity for a period of at least three
(3) years prior to the date of the transaction
from which the net capital gains arise,
b. "holding period" means an uninterrupted period of
time. The holding period shall include any additional
period when the property was held by another
individual or entity, if such additional period is

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included in the taxpayer's holding period for the
asset pursuant to the Internal Revenue Code,
c. "Oklahoma company", "limited liability company", or
"partnership" means an entity whose primary
headquarters have been located in this state for at
least three (3) uninterrupted years prior to the date
of the transaction from which the net capital gains
arise,
d. "direct" means the taxpayer directly owns the asset,
and
e. "indirect" means the taxpayer owns an interest in a
pass-through entity (or chain of pass-through
entities) that sells the asset that gives rise to the
qualifying gains receiving capital treatment.
(1) With respect to sales of real property or
tangible personal property located within this
state, the deduction described in this subsection
shall not apply unless the pass-through entity
that makes the sale has held the property for not
less than five (5) uninterrupted years prior to
the date of the transaction that created the
capital gain, and each pass-through entity
included in the chain of ownership has been a
member, partner, or shareholder of the pass-

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through entity in the tier immediately below it
for an uninterrupted period of not less than five
(5) years.
(2) With respect to sales of stock or ownership
interest in or sales of all or substantially all
of the assets of an Oklahoma company, limited
liability company, or partnership, the deduction
described in this subsection shall not apply
unless the pass-through entity that makes the
sale has held the stock or ownership interest or
the assets for not less than three (3)
uninterrupted years prior to the date of the
transaction that created the capital gain, and
each pass-through entity included in the chain of
ownership has been a member, partner or
shareholder of the pass-through entity in the
tier immediately below it for an uninterrupted
period of not less than three (3) years.
E. The Oklahoma adjusted gross income of any individual
taxpayer shall be further adjusted as follows to arrive at Oklahoma
taxable income:
1. a. In the case of individuals, there shall be added or
deducted, as the case may be, the difference necessary
to allow personal exemptions of One Thousand Dollars

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($1,000.00) in lieu of the personal exemptions allowed
by the Internal Revenue Code.
b. There shall be allowed an additional exemption of One
Thousand Dollars ($1,000.00) for each taxpayer or
spouse who is blind at the close of the tax year. For
purposes of this subparagraph, an individual is blind
only if the central visual acuity of the individual
does not exceed 20/200 in the better eye with
correcting lenses, or if the visual acuity of the
individual is greater than 20/200, but is accompanied
by a limitation in the fields of vision such that the
widest diameter of the visual field subtends an angle
no greater than twenty (20) degrees.
c. There shall be allowed an additional exemption of One
Thousand Dollars ($1,000.00) for each taxpayer or
spouse who is sixty-five (65) years of age or older at
the close of the tax year based upon the filing status
and federal adjusted gross income of the taxpayer.
Taxpayers with the following filing status may claim
this exemption if the federal adjusted gross income
does not exceed:
(1) Twenty-five Thousand Dollars ($25,000.00) if
married and filing jointly;

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(2) Twelve Thousand Five Hundred Dollars ($12,500.00)
if married and filing separately;
(3) Fifteen Thousand Dollars ($15,000.00) if single;
and
(4) Nineteen Thousand Dollars ($19,000.00) if a
qualifying head of household.
Provided, for taxable years beginning after December
31, 1999, amounts included in the calculation of
federal adjusted gross income pursuant to the
conversion of a traditional individual retirement
account to a Roth individual retirement account shall
be excluded from federal adjusted gross income for
purposes of the income thresholds provided in this
subparagraph.
2. a. For taxable years beginning on or before December 31,
2005, in the case of individuals who use the standard
deduction in determining taxable income, there shall
be added or deducted, as the case may be, the
difference necessary to allow a standard deduction in
lieu of the standard deduction allowed by the Internal
Revenue Code, in an amount equal to the larger of
fifteen percent (15%) of the Oklahoma adjusted gross
income or One Thousand Dollars ($1,000.00), but not to
exceed Two Thousand Dollars ($2,000.00), except that

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in the case of a married individual filing a separate
return such deduction shall be the larger of fifteen
percent (15%) of such Oklahoma adjusted gross income
or Five Hundred Dollars ($500.00), but not to exceed
the maximum amount of One Thousand Dollars
($1,000.00).
b. For taxable years beginning on or after January 1,
2006, and before January 1, 2007, in the case of
individuals who use the standard deduction in
determining taxable income, there shall be added or
deducted, as the case may be, the difference necessary
to allow a standard deduction in lieu of the standard
deduction allowed by the Internal Revenue Code, in an
amount equal to:
(1) Three Thousand Dollars ($3,000.00), if the filing
status is married filing joint, head of household
or qualifying widow; or
(2) Two Thousand Dollars ($2,000.00), if the filing
status is single or married filing separate.
c. For the taxable year beginning on January 1, 2007, and
ending December 31, 2007, in the case of individuals
who use the standard deduction in determining taxable
income, there shall be added or deducted, as the case
may be, the difference necessary to allow a standard

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deduction in lieu of the standard deduction allowed by
the Internal Revenue Code, in an amount equal to:
(1) Five Thousand Five Hundred Dollars ($5,500.00),
if the filing status is married filing joint or
qualifying widow; or
(2) Four Thousand One Hundred Twenty-five Dollars
($4,125.00) for a head of household; or
(3) Two Thousand Seven Hundred Fifty Dollars
($2,750.00), if the filing status is single or
married filing separate.
d. For the taxable year beginning on January 1, 2008, and
ending December 31, 2008, in the case of individuals
who use the standard deduction in determining taxable
income, there shall be added or deducted, as the case
may be, the difference necessary to allow a standard
deduction in lieu of the standard deduction allowed by
the Internal Revenue Code, in an amount equal to:
(1) Six Thousand Five Hundred Dollars ($6,500.00), if
the filing status is married filing joint or
qualifying widow, or
(2) Four Thousand Eight Hundred Seventy-five Dollars
($4,875.00) for a head of household, or

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(3) Three Thousand Two Hundred Fifty Dollars
($3,250.00), if the filing status is single or
married filing separate.
e. For the taxable year beginning on January 1, 2009, and
ending December 31, 2009, in the case of individuals
who use the standard deduction in determining taxable
income, there shall be added or deducted, as the case
may be, the difference necessary to allow a standard
deduction in lieu of the standard deduction allowed by
the Internal Revenue Code, in an amount equal to:
(1) Eight Thousand Five Hundred Dollars ($8,500.00),
if the filing status is married filing joint or
qualifying widow, or
(2) Six Thousand Three Hundred Seventy-five Dollars
($6,375.00) for a head of household, or
(3) Four Thousand Two Hundred Fifty Dollars
($4,250.00), if the filing status is single or
married filing separate.
Oklahoma adjusted gross income shall be increased by
any amounts paid for motor vehicle excise taxes which
were deducted as allowed by the Internal Revenue Code.
f. For taxable years beginning on or after January 1,
2010, and ending on December 31, 2016, in the case of
individuals who use the standard deduction in

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determining taxable income, there shall be added or
deducted, as the case may be, the difference necessary
to allow a standard deduction equal to the standard
deduction allowed by the Internal Revenue Code, based
upon the amount and filing status prescribed by such
Code for purposes of filing federal individual income
tax returns.
g. For taxable years beginning on or after January 1,
2017, in the case of individuals who use the standard
deduction in determining taxable income, there shall
be added or deducted, as the case may be, the
difference necessary to allow a standard deduction in
lieu of the standard deduction allowed by the Internal
Revenue Code, as follows:
(1) Six Thousand Three Hundred Fifty Dollars
($6,350.00) for single or married filing
separately,
(2) Twelve Thousand Seven Hundred Dollars
($12,700.00) for married filing jointly or
qualifying widower with dependent child, and
(3) Nine Thousand Three Hundred Fifty Dollars
($9,350.00) for head of household.
3. a. In the case of resident and part-year resident
individuals having adjusted gross income from sources

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both within and without the state, the itemized or
standard deductions and personal exemptions shall be
reduced to an amount which is the same portion of the
total thereof as Oklahoma adjusted gross income is of
adjusted gross income. To the extent itemized
deductions include allowable moving expense, proration
of moving expense shall not be required or permitted
but allowable moving expense shall be fully deductible
for those taxpayers moving within or into this state
and no part of moving expense shall be deductible for
those taxpayers moving without or out of this state.
All other itemized or standard deductions and personal
exemptions shall be subject to proration as provided
by law.
b. For taxable years beginning on or after January 1,
2018, the net amount of itemized deductions allowable
on an Oklahoma income tax return, subject to the
provisions of paragraph 24 of this subsection, shall
not exceed Seventeen Thousand Dollars ($17,000.00).
For purposes of this subparagraph, charitable
contributions and medical expenses deductible for
federal income tax purposes shall be excluded from the
amount of Seventeen Thousand Dollars ($17,000.00) as
specified by this subparagraph.

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4. A resident individual with a physical disability
constituting a substantial handicap to employment may deduct from
Oklahoma adjusted gross income such expenditures to modify a motor
vehicle, home or workplace as are necessary to compensate for his or
her handicap. A veteran certified by the Department of Veterans
Affairs of the federal government as having a service-connected
disability shall be conclusively presumed to be an individual with a
physical disability constituting a substantial handicap to
employment. The Tax Commission shall promulgate rules containing a
list of combinations of common disabilities and modifications which
may be presumed to qualify for this deduction. The Tax Commission
shall prescribe necessary requirements for verification.
5. a. Before July 1, 2010, the first One Thousand Five
Hundred Dollars ($1,500.00) received by any person
from the United States as salary or compensation in
any form, other than retirement benefits, as a member
of any component of the Armed Forces of the United
States shall be deducted from taxable income.
b. On or after July 1, 2010, one hundred percent (100%)
of the income received by any person from the United
States as salary or compensation in any form, other
than retirement benefits, as a member of any component
of the Armed Forces of the United States shall be
deducted from taxable income.

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c. Whenever the filing of a timely income tax return by a
member of the Armed Forces of the United States is
made impracticable or impossible of accomplishment by
reason of:
(1) absence from the United States, which term
includes only the states and the District of
Columbia;
(2) absence from this state while on active duty; or
(3) confinement in a hospital within the United
States for treatment of wounds, injuries or
disease,
the time for filing a return and paying an income tax
shall be and is hereby extended without incurring
liability for interest or penalties, to the fifteenth
day of the third month following the month in which:
(a) Such individual shall return to the United
States if the extension is granted pursuant
to subparagraph a of this paragraph, return
to this state if the extension is granted
pursuant to subparagraph b of this paragraph
or be discharged from such hospital if the
extension is granted pursuant to
subparagraph c of this paragraph; or

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(b) An executor, administrator, or conservator
of the estate of the taxpayer is appointed,
whichever event occurs the earliest.
Provided, that the Tax Commission may, in its discretion, grant
any member of the Armed Forces of the United States an extension of
time for filing of income tax returns and payment of income tax
without incurring liabilities for interest or penalties. Such
extension may be granted only when in the judgment of the Tax
Commission a good cause exists therefor and may be for a period in
excess of six (6) months. A record of every such extension granted,
and the reason therefor, shall be kept.
6. Before July 1, 2010, the salary or any other form of
compensation, received from the United States by a member of any
component of the Armed Forces of the United States, shall be
deducted from taxable income during the time in which the person is
detained by the enemy in a conflict, is a prisoner of war or is
missing in action and not deceased; provided, after July 1, 2010,
all such salary or compensation shall be subject to the deduction as
provided pursuant to paragraph 5 of this subsection.
7. a. An individual taxpayer, whether resident or
nonresident, may deduct an amount equal to the federal
income taxes paid by the taxpayer during the taxable
year.

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b. Federal taxes as described in subparagraph a of this
paragraph shall be deductible by any individual
taxpayer, whether resident or nonresident, only to the
extent they relate to income subject to taxation
pursuant to the provisions of the Oklahoma Income Tax
Act. The maximum amount allowable in the preceding
paragraph shall be prorated on the ratio of the
Oklahoma adjusted gross income to federal adjusted
gross income.
c. For the purpose of this paragraph, "federal income
taxes paid" shall mean federal income taxes, surtaxes
imposed on incomes or excess profits taxes, as though
the taxpayer was on the accrual basis. In determining
the amount of deduction for federal income taxes for
tax year 2001, the amount of the deduction shall not
be adjusted by the amount of any accelerated ten
percent (10%) tax rate bracket credit or advanced
refund of the credit received during the tax year
provided pursuant to the federal Economic Growth and
Tax Relief Reconciliation Act of 2001, P.L. No. 107-
16, and the advanced refund of such credit shall not
be subject to taxation.

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d. The provisions of this paragraph shall apply to all
taxable years ending after December 31, 1978, and
beginning before January 1, 2006.
8. Retirement benefits not to exceed Five Thousand Five Hundred
Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five
Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand
Dollars ($10,000.00) for the 2006 tax year and all subsequent tax
years, which are received by an individual from the civil service of
the United States, the Oklahoma Public Employees Retirement System,
the Teachers' Retirement System of Oklahoma, the Oklahoma Law
Enforcement Retirement System, the Oklahoma Firefighters Pension and
Retirement System, the Oklahoma Police Pension and Retirement
System, the employee retirement systems created by counties pursuant
to Section 951 et seq. of Title 19 of the Oklahoma Statutes, the
Uniform Retirement System for Justices and Judges, the Oklahoma
Wildlife Conservation Department Retirement Fund, the Oklahoma
Employment Security Commission Retirement Plan, or the employee
retirement systems created by municipalities pursuant to Section 48-
101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt
from taxable income.
9. In taxable years beginning after December 3l, 1984, Social
Security benefits received by an individual shall be exempt from
taxable income, to the extent such benefits are included in the

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federal adjusted gross income pursuant to the provisions of Section
86 of the Internal Revenue Code, 26 U.S.C., Section 86.
10. For taxable years beginning after December 31, 1994, lump-
sum distributions from employer plans of deferred compensation,
which are not qualified plans within the meaning of Section 401(a)
of the Internal Revenue Code, 26 U.S.C., Section 401(a), and which
are deposited in and accounted for within a separate bank account or
brokerage account in a financial institution within this state,
shall be excluded from taxable income in the same manner as a
qualifying rollover contribution to an individual retirement account
within the meaning of Section 408 of the Internal Revenue Code, 26
U.S.C., Section 408. Amounts withdrawn from such bank or brokerage
account, including any earnings thereon, shall be included in
taxable income when withdrawn in the same manner as withdrawals from
individual retirement accounts within the meaning of Section 408 of
the Internal Revenue Code.
11. In taxable years beginning after December 31, 1995,
contributions made to and interest received from a medical savings
account established pursuant to Sections 2621 through 2623 of Title
63 of the Oklahoma Statutes shall be exempt from taxable income.
12. For taxable years beginning after December 31, 1996, the
Oklahoma adjusted gross income of any individual taxpayer who is a
swine or poultry producer may be further adjusted for the deduction
for depreciation allowed for new construction or expansion costs

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which may be computed using the same depreciation method elected for
federal income tax purposes except that the useful life shall be
seven (7) years for purposes of this paragraph. If depreciation is
allowed as a deduction in determining the adjusted gross income of
an individual, any depreciation calculated and claimed pursuant to
this section shall in no event be a duplication of any depreciation
allowed or permitted on the federal income tax return of the
individual.
13. a. In taxable years beginning after December 31, 2002,
nonrecurring adoption expenses paid by a resident
individual taxpayer in connection with:
(1) the adoption of a minor, or
(2) a proposed adoption of a minor which did not
result in a decreed adoption,
may be deducted from the Oklahoma adjusted gross
income.
b. The deductions for adoptions and proposed adoptions
authorized by this paragraph shall not exceed Twenty
Thousand Dollars ($20,000.00) per calendar year.
c. The Tax Commission shall promulgate rules to implement
the provisions of this paragraph which shall contain a
specific list of nonrecurring adoption expenses which
may be presumed to qualify for the deduction. The Tax

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Commission shall prescribe necessary requirements for
verification.
d. "Nonrecurring adoption expenses" means adoption fees,
court costs, medical expenses, attorney fees and
expenses which are directly related to the legal
process of adoption of a child including, but not
limited to, costs relating to the adoption study,
health and psychological examinations, transportation
and reasonable costs of lodging and food for the child
or adoptive parents which are incurred to complete the
adoption process and are not reimbursed by other
sources. The term nonrecurring adoption expenses
shall not include attorney fees incurred for the
purpose of litigating a contested adoption, from and
after the point of the initiation of the contest,
costs associated with physical remodeling, renovation
and alteration of the adoptive parents' home or
property, except for a special needs child as
authorized by the court.
14. a. In taxable years beginning before January 1, 2005,
retirement benefits not to exceed the amounts
specified in this paragraph, which are received by an
individual sixty-five (65) years of age or older and
whose Oklahoma adjusted gross income is Twenty-five

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Thousand Dollars ($25,000.00) or less if the filing
status is single, head of household, or married filing
separate, or Fifty Thousand Dollars ($50,000.00) or
less if the filing status is married filing joint or
qualifying widow, shall be exempt from taxable income.
In taxable years beginning after December 31, 2004,
retirement benefits not to exceed the amounts
specified in this paragraph, which are received by an
individual whose Oklahoma adjusted gross income is
less than the qualifying amount specified in this
paragraph, shall be exempt from taxable income.
b. For purposes of this paragraph, the qualifying amount
shall be as follows:
(1) in taxable years beginning after December 31,
2004, and prior to January 1, 2007, the
qualifying amount shall be Thirty-seven Thousand
Five Hundred Dollars ($37,500.00) or less if the
filing status is single, head of household, or
married filing separate, or Seventy-five Thousand
Dollars ($75,000.00) or less if the filing status
is married filing jointly or qualifying widow,
(2) in the taxable year beginning January 1, 2007,
the qualifying amount shall be Fifty Thousand
Dollars ($50,000.00) or less if the filing status

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is single, head of household, or married filing
separate, or One Hundred Thousand Dollars
($100,000.00) or less if the filing status is
married filing jointly or qualifying widow,
(3) in the taxable year beginning January 1, 2008,
the qualifying amount shall be Sixty-two Thousand
Five Hundred Dollars ($62,500.00) or less if the
filing status is single, head of household, or
married filing separate, or One Hundred Twenty-
five Thousand Dollars ($125,000.00) or less if
the filing status is married filing jointly or
qualifying widow,
(4) in the taxable year beginning January 1, 2009,
the qualifying amount shall be One Hundred
Thousand Dollars ($100,000.00) or less if the
filing status is single, head of household, or
married filing separate, or Two Hundred Thousand
Dollars ($200,000.00) or less if the filing
status is married filing jointly or qualifying
widow, and
(5) in the taxable year beginning January 1, 2010,
and subsequent taxable years, there shall be no
limitation upon the qualifying amount.

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c. For purposes of this paragraph, "retirement benefits"
means the total distributions or withdrawals from the
following:
(1) an employee pension benefit plan which satisfies
the requirements of Section 401 of the Internal
Revenue Code, 26 U.S.C., Section 401,
(2) an eligible deferred compensation plan that
satisfies the requirements of Section 457 of the
Internal Revenue Code, 26 U.S.C., Section 457,
(3) an individual retirement account, annuity or
trust or simplified employee pension that
satisfies the requirements of Section 408 of the
Internal Revenue Code, 26 U.S.C., Section 408,
(4) an employee annuity subject to the provisions of
Section 403(a) or (b) of the Internal Revenue
Code, 26 U.S.C., Section 403(a) or (b),
(5) United States Retirement Bonds which satisfy the
requirements of Section 86 of the Internal
Revenue Code, 26 U.S.C., Section 86, or
(6) lump-sum distributions from a retirement plan
which satisfies the requirements of Section
402(e) of the Internal Revenue Code, 26 U.S.C.,
Section 402(e).

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d. The amount of the exemption provided by this paragraph
shall be limited to Five Thousand Five Hundred Dollars
($5,500.00) for the 2004 tax year, Seven Thousand Five
Hundred Dollars ($7,500.00) for the 2005 tax year and
Ten Thousand Dollars ($10,000.00) for the tax year
2006 and for all subsequent tax years. Any individual
who claims the exemption provided for in paragraph 8
of this subsection shall not be permitted to claim a
combined total exemption pursuant to this paragraph
and paragraph 8 of this subsection in an amount
exceeding Five Thousand Five Hundred Dollars
($5,500.00) for the 2004 tax year, Seven Thousand Five
Hundred Dollars ($7,500.00) for the 2005 tax year and
Ten Thousand Dollars ($10,000.00) for the 2006 tax
year and all subsequent tax years.
15. In taxable years beginning after December 31, 1999, for an
individual engaged in production agriculture who has filed a
Schedule F form with the taxpayer's federal income tax return for
such taxable year, there shall be excluded from taxable income any
amount which was included as federal taxable income or federal
adjusted gross income and which consists of the discharge of an
obligation by a creditor of the taxpayer incurred to finance the
production of agricultural products.

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16. In taxable years beginning December 31, 2000, an amount
equal to one hundred percent (100%) of the amount of any scholarship
or stipend received from participation in the Oklahoma Police Corps
Program, as established in Section 2-140.3 of Title 47 of the
Oklahoma Statutes shall be exempt from taxable income.
17. a. In taxable years beginning after December 31, 2001,
and before January 1, 2005, there shall be allowed a
deduction in the amount of contributions to accounts
established pursuant to the Oklahoma College Savings
Plan Act. The deduction shall equal the amount of
contributions to accounts, but in no event shall the
deduction for each contributor exceed Two Thousand
Five Hundred Dollars ($2,500.00) each taxable year for
each account.
b. In taxable years beginning after December 31, 2004,
each taxpayer shall be allowed a deduction for
contributions to accounts established pursuant to the
Oklahoma College Savings Plan Act. The maximum annual
deduction shall equal the amount of contributions to
all such accounts plus any contributions to such
accounts by the taxpayer for prior taxable years after
December 31, 2004, which were not deducted, but in no
event shall the deduction for each tax year exceed Ten
Thousand Dollars ($10,000.00) for each individual

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taxpayer or Twenty Thousand Dollars ($20,000.00) for
taxpayers filing a joint return. Any amount of a
contribution that is not deducted by the taxpayer in
the year for which the contribution is made may be
carried forward as a deduction from income for the
succeeding five (5) years. For taxable years
beginning after December 31, 2005, deductions may be
taken for contributions and rollovers made during a
taxable year and up to April 15 of the succeeding
year, or the due date of a taxpayer's state income tax
return, excluding extensions, whichever is later.
Provided, a deduction for the same contribution may
not be taken for two (2) different taxable years.
c. In taxable years beginning after December 31, 2006,
deductions for contributions made pursuant to
subparagraph b of this paragraph shall be limited as
follows:
(1) for a taxpayer who qualified for the five-year
carryforward election and who takes a rollover or
nonqualified withdrawal during that period, the
tax deduction otherwise available pursuant to
subparagraph b of this paragraph shall be reduced
by the amount which is equal to the rollover or
nonqualified withdrawal, and

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(2) for a taxpayer who elects to take a rollover or
nonqualified withdrawal within the same tax year
in which a contribution was made to the
taxpayer's account, the tax deduction otherwise
available pursuant to subparagraph b of this
paragraph shall be reduced by the amount of the
contribution which is equal to the rollover or
nonqualified withdrawal.
d. If a taxpayer elects to take a rollover on a
contribution for which a deduction has been taken
pursuant to subparagraph b of this paragraph within
one (1) year of the date of contribution, the amount
of such rollover shall be included in the adjusted
gross income of the taxpayer in the taxable year of
the rollover.
e. If a taxpayer makes a nonqualified withdrawal of
contributions for which a deduction was taken pursuant
to subparagraph b of this paragraph, such nonqualified
withdrawal and any earnings thereon shall be included
in the adjusted gross income of the taxpayer in the
taxable year of the nonqualified withdrawal.
f. As used in this paragraph:

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(1) "non-qualified withdrawal" means a withdrawal
from an Oklahoma College Savings Plan account
other than one of the following:
(a) a qualified withdrawal,
(b) a withdrawal made as a result of the death
or disability of the designated beneficiary
of an account,
(c) a withdrawal that is made on the account of
a scholarship or the allowance or payment
described in Section 135(d)(1)(B) or (C) or
by the Internal Revenue Code, received by
the designated beneficiary to the extent the
amount of the refund does not exceed the
amount of the scholarship, allowance, or
payment, or
(d) a rollover or change of designated
beneficiary as permitted by subsection F of
Section 3970.7 of Title 70 of the Oklahoma
Statutes, and
(2) "rollover" means the transfer of funds from the
Oklahoma College Savings Plan to any other plan
under Section 529 of the Internal Revenue Code.
18. For tax years 2006 through 2021, retirement benefits
received by an individual from any component of the Armed Forces of

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the United States in an amount not to exceed the greater of seventy-
five percent (75%) of such benefits or Ten Thousand Dollars
($10,000.00) shall be exempt from taxable income but in no case less
than the amount of the exemption provided by paragraph 14 of this
subsection. For tax year 2022 and subsequent tax years, retirement
benefits received by an individual from any component of the Armed
Forces of the United States shall be exempt from taxable income.
19. For taxable years beginning after December 31, 2006,
retirement benefits received by federal civil service retirees,
including survivor annuities, paid in lieu of Social Security
benefits shall be exempt from taxable income to the extent such
benefits are included in the federal adjusted gross income pursuant
to the provisions of Section 86 of the Internal Revenue Code, 26
U.S.C., Section 86, according to the following schedule:
a. in the taxable year beginning January 1, 2007, twenty
percent (20%) of such benefits shall be exempt,
b. in the taxable year beginning January 1, 2008, forty
percent (40%) of such benefits shall be exempt,
c. in the taxable year beginning January 1, 2009, sixty
percent (60%) of such benefits shall be exempt,
d. in the taxable year beginning January 1, 2010, eighty
percent (80%) of such benefits shall be exempt, and

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e. in the taxable year beginning January 1, 2011, and
subsequent taxable years, one hundred percent (100%)
of such benefits shall be exempt.
20. a. For taxable years beginning after December 31, 2007, a
resident individual may deduct up to Ten Thousand
Dollars ($10,000.00) from Oklahoma adjusted gross
income if the individual, or the dependent of the
individual, while living, donates one or more human
organs of the individual to another human being for
human organ transplantation. As used in this
paragraph, "human organ" means all or part of a liver,
pancreas, kidney, intestine, lung, or bone marrow. A
deduction that is claimed under this paragraph may be
claimed in the taxable year in which the human organ
transplantation occurs.
b. An individual may claim this deduction only once, and
the deduction may be claimed only for unreimbursed
expenses that are incurred by the individual and
related to the organ donation of the individual.
c. The Oklahoma Tax Commission shall promulgate rules to
implement the provisions of this paragraph which shall
contain a specific list of expenses which may be
presumed to qualify for the deduction. The Tax

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Commission shall prescribe necessary requirements for
verification.
21. For taxable years beginning after December 31, 2009, there
shall be exempt from taxable income any amount received by the
beneficiary of the death benefit for an emergency medical technician
or a registered emergency medical responder provided by Section 1-
2505.1 of Title 63 of the Oklahoma Statutes.
22. For taxable years beginning after December 31, 2008,
taxable income shall be increased by any unemployment compensation
exempted under Section 85(c) of the Internal Revenue Code, 26
U.S.C., Section 85(c)(2009).
23. For taxable years beginning after December 31, 2008, there
shall be exempt from taxable income any payment in an amount less
than Six Hundred Dollars ($600.00) received by a person as an award
for participation in a competitive livestock show event. For
purposes of this paragraph, the payment shall be treated as a
scholarship amount paid by the entity sponsoring the event and the
sponsoring entity shall cause the payment to be categorized as a
scholarship in its books and records.
24. For taxable years beginning on or after January 1, 2016,
taxable income shall be increased by any amount of state and local
sales or income taxes deducted under 26 U.S.C., Section 164 of the
Internal Revenue Code. If the amount of state and local taxes
deducted on the federal return is limited, taxable income on the

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state return shall be increased only by the amount actually deducted
after any such limitations are applied.
25. For taxable years beginning after December 31, 2020, each
taxpayer shall be allowed a deduction for contributions to accounts
established pursuant to the Achieving a Better Life Experience
(ABLE) Program as established in Section 4001.1 et seq. of Title 56
of the Oklahoma Statutes. For any tax year, the deduction provided
for in this paragraph shall not exceed Ten Thousand Dollars
($10,000.00) for an individual taxpayer or Twenty Thousand Dollars
($20,000.00) for taxpayers filing a joint return. Any amount of
contribution not deducted by the taxpayer in the tax year for which
the contribution is made may be carried forward as a deduction from
income for up to five (5) tax years. Deductions may be taken for
contributions made during the tax year and through April 15 of the
succeeding tax year, or through the due date of a taxpayer's state
income tax return excluding extensions, whichever is later.
Provided, a deduction for the same contribution may not be taken in
more than one (1) tax year.
26. a. For taxable years beginning on or after January 1,
2027, there shall be exempt from Oklahoma adjusted
gross income One Thousand Dollars ($1,000.00) derived
from any lawful business activity conducted by a
person less than eighteen (18) years of age,
conducting the business as a sole proprietor and not

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through any other business entity or other legal
entity.
b. The exemption provided for in this paragraph shall
apply only to a business that is owned and operated
primarily by one or more individuals who have not
attained eighteen (18) years of age, who may receive
only limited assistance from adults in the nature of
supervision, transportation, safety oversight, or
other incidental support that does not constitute
material management or operation of the business. The
business shall not be eligible for the exemption if
any adult exercises primary control over business
decisions, management, or operations, or if the
business is materially operated for the benefit of an
adult.
c. To qualify for the exemption provided by this
paragraph, the business activity shall:
(1) generate gross revenue of less than One Thousand
Dollars ($1,000.00) during the calendar year, and
(2) be operated only on private property with the
consent of the owner or lawful possessor of the
property, or as part of a community event that
separately registers youth vendors.

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F. 1. For taxable years beginning after December 31, 2004, a
deduction from the Oklahoma adjusted gross income of any individual
taxpayer shall be allowed for qualifying gains receiving capital
treatment that are included in the federal adjusted gross income of
such individual taxpayer during the taxable year.
2. As used in this subsection:
a. "qualifying gains receiving capital treatment" means
the amount of net capital gains, as defined in Section
1222(11) of the Internal Revenue Code, included in an
individual taxpayer's federal income tax return that
result from:
(1) the sale of real property or tangible personal
property located within this state that has been
directly or indirectly owned by the individual
taxpayer for a holding period of at least five
(5) years prior to the date of the transaction
from which such net capital gains arise,
(2) the sale of stock or the sale of a direct or
indirect ownership interest in an Oklahoma
company, limited liability company, or
partnership where such stock or ownership
interest has been directly or indirectly owned by
the individual taxpayer for a holding period of
at least two (2) years prior to the date of the

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transaction from which the net capital gains
arise, or
(3) the sale of real property, tangible personal
property or intangible personal property located
within this state as part of the sale of all or
substantially all of the assets of an Oklahoma
company, limited liability company, or
partnership or an Oklahoma proprietorship
business enterprise where such property has been
directly or indirectly owned by such entity or
business enterprise or owned by the owners of
such entity or business enterprise for a period
of at least two (2) years prior to the date of
the transaction from which the net capital gains
arise,
b. "holding period" means an uninterrupted period of
time. The holding period shall include any additional
period when the property was held by another
individual or entity, if such additional period is
included in the taxpayer's holding period for the
asset pursuant to the Internal Revenue Code,
c. "Oklahoma company," "limited liability company," or
"partnership" means an entity whose primary
headquarters have been located in this state for at

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least three (3) uninterrupted years prior to the date
of the transaction from which the net capital gains
arise,
d. "direct" means the individual taxpayer directly owns
the asset,
e. "indirect" means the individual taxpayer owns an
interest in a pass-through entity (or chain of pass-
through entities) that sells the asset that gives rise
to the qualifying gains receiving capital treatment.
(1) With respect to sales of real property or
tangible personal property located within this
state, the deduction described in this subsection
shall not apply unless the pass-through entity
that makes the sale has held the property for not
less than five (5) uninterrupted years prior to
the date of the transaction that created the
capital gain, and each pass-through entity
included in the chain of ownership has been a
member, partner, or shareholder of the pass-
through entity in the tier immediately below it
for an uninterrupted period of not less than five
(5) years.
(2) With respect to sales of stock or ownership
interest in or sales of all or substantially all

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of the assets of an Oklahoma company, limited
liability company, partnership or Oklahoma
proprietorship business enterprise, the deduction
described in this subsection shall not apply
unless the pass-through entity that makes the
sale has held the stock or ownership interest for
not less than two (2) uninterrupted years prior
to the date of the transaction that created the
capital gain, and each pass-through entity
included in the chain of ownership has been a
member, partner or shareholder of the pass-
through entity in the tier immediately below it
for an uninterrupted period of not less than two
(2) years. For purposes of this division,
uninterrupted ownership prior to July 1, 2007,
shall be included in the determination of the
required holding period prescribed by this
division, and
f. "Oklahoma proprietorship business enterprise" means a
business enterprise whose income and expenses have
been reported on Schedule C or F of an individual
taxpayer's federal income tax return, or any similar
successor schedule published by the Internal Revenue
Service and whose primary headquarters have been

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located in this state for at least three (3)
uninterrupted years prior to the date of the
transaction from which the net capital gains arise.
G. 1. For purposes of computing its Oklahoma taxable income
under this section, the dividends-paid deduction otherwise allowed
by federal law in computing net income of a real estate investment
trust that is subject to federal income tax shall be added back in
computing the tax imposed by this state under this title if the real
estate investment trust is a captive real estate investment trust.
2. For purposes of computing its Oklahoma taxable income under
this section, a taxpayer shall add back otherwise deductible rents
and interest expenses paid to a captive real estate investment trust
that is not subject to the provisions of paragraph 1 of this
subsection. As used in this subsection:
a. the term "real estate investment trust" or "REIT"
means the meaning ascribed to such term in Section 856
of the Internal Revenue Code,
b. the term "captive real estate investment trust" means
a real estate investment trust, the shares or
beneficial interests of which are not regularly traded
on an established securities market and more than
fifty percent (50%) of the voting power or value of
the beneficial interests or shares of which are owned

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or controlled, directly or indirectly, or
constructively, by a single entity that is:
(1) treated as an association taxable as a
corporation under the Internal Revenue Code, and
(2) not exempt from federal income tax pursuant to
the provisions of Section 501(a) of the Internal
Revenue Code.
The term shall not include a real estate investment
trust that is intended to be regularly traded on an
established securities market, and that satisfies the
requirements of Section 856(a)(5) and (6) of the U.S.
Internal Revenue Code by reason of Section 856(h)(2)
of the Internal Revenue Code,
c. the term "association taxable as a corporation" shall
not include the following entities:
(1) any real estate investment trust as defined in
paragraph a of this subsection other than a
captive real estate investment trust, or
(2) any qualified real estate investment trust
subsidiary under Section 856(i) of the Internal
Revenue Code, other than a qualified REIT
subsidiary of a captive real estate investment
trust, or

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(3) any listed Australian property trust (meaning an
Australian unit trust registered as a "managed
investment scheme" under the Australian
Corporations Act 2001 in which the principal
class of units is listed on a recognized stock
exchange in Australia and is regularly traded on
an established securities market), or an entity
organized as a trust, provided that a listed
Australian property trust owns or controls,
directly or indirectly, seventy-five percent
(75%) or more of the voting power or value of the
beneficial interests or shares of such trust, or
(4) any qualified foreign entity, meaning a
corporation, trust, association or partnership
organized outside the laws of the United States
and which satisfies the following criteria:
(a) at least seventy-five percent (75%) of the
entity's total asset value at the close of
its taxable year is represented by real
estate assets, as defined in Section
856(c)(5)(B) of the Internal Revenue Code,
thereby including shares or certificates of
beneficial interest in any real estate

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investment trust, cash and cash equivalents,
and U.S. Government securities,
(b) the entity receives a dividend-paid
deduction comparable to Section 561 of the
Internal Revenue Code, or is exempt from
entity level tax,
(c) the entity is required to distribute at
least eighty-five percent (85%) of its
taxable income, as computed in the
jurisdiction in which it is organized, to
the holders of its shares or certificates of
beneficial interest on an annual basis,
(d) not more than ten percent (10%) of the
voting power or value in such entity is held
directly or indirectly or constructively by
a single entity or individual, or the shares
or beneficial interests of such entity are
regularly traded on an established
securities market, and
(e) the entity is organized in a country which
has a tax treaty with the United States.
3. For purposes of this subsection, the constructive ownership
rules of Section 318(a) of the Internal Revenue Code, as modified by
Section 856(d)(5) of the Internal Revenue Code, shall apply in

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determining the ownership of stock, assets, or net profits of any
person.
4. A real estate investment trust that does not become
regularly traded on an established securities market within one (1)
year of the date on which it first becomes a real estate investment
trust shall be deemed not to have been regularly traded on an
established securities market, retroactive to the date it first
became a real estate investment trust, and shall file an amended
return reflecting such retroactive designation for any tax year or
part year occurring during its initial year of status as a real
estate investment trust. For purposes of this subsection, a real
estate investment trust becomes a real estate investment trust on
the first day it has both met the requirements of Section 856 of the
Internal Revenue Code and has elected to be treated as a real estate
investment trust pursuant to Section 856(c)(1) of the Internal
Revenue Code.
SECTION 4. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 20001 of Title 74, unless there
is created a duplication in numbering, reads as follows:
No person conducting a business as a sole proprietor who is less
than eighteen (18) years of age shall be required to obtain a
business license from any state or local government entity, and the
person shall not be subject to any fine or penalty as a result of
conducting such business for a period not in excess of ninety (90)

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days during a calendar year; provided such person performing work
regulated by Title 59 of the Oklahoma Statutes or any other
applicable law in the Oklahoma Statutes shall comply with all
Oklahoma licensing and registration laws, including holding a
current license or registration in good standing.
SECTION 5. This act shall become effective November 1, 2026.
Passed the House of Representatives the 11th day of March, 2026.

Presiding Officer of the House
of Representatives

Passed the Senate the ___ day of __________, 2026.

Presiding Officer of the Senate