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An Act
ENROLLED HOUSE
BILL NO. 4191 By: Chapman of the House
and
Coleman of the Senate
An Act relating to revenue and taxation; amending 68
O.S. 2021, Sections 3903 and 3904, which relate to
the Small Employer Quality Jobs Act; modifying
definition; defining term; modifying criteria for
eligibility for incentive payments; providing for
capital investment; specifying capital investment
requirement; and prescribing procedures for the
Oklahoma Department of Commerce.
SUBJECT: Revenue and taxation
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 3903, is
amended to read as follows:
Section 3903. As used in the Small Employer Quality Jobs
Incentive Act:
1. "Basic industry" means a basic industry as defined under the
Oklahoma Quality Jobs Program Act in divisions (1) through (9) of
subparagraph a of paragraph 1 of subsection A of Section 3603 of
this title, excluding those activities described in division (10) of
subparagraph a of paragraph 1 of subsection A of Section 3603 of
this title. Provided, for the purposes of the Small Employer
Quality Jobs Incentive Act, the determination required by
subdivision (b) of division (7) or division (8) of subparagraph a of
paragraph 1 of subsection A of Section 3603 of this title shall be
made by the Oklahoma Department of Commerce and not the Incentive
Approval Committee. Basic industry also includes those motion
picture and video industries defined or classified in the NAICS
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Manual under U.S. Industry Group No. 5121, and those sound recording
industries defined or classified in the NAICS Manual under U.S.
Industry Group No. 5122, and those child daycare industries defined
or classified in the NAICS Manual under U.S. Industry Group No.
624410;
2. "Establishment" means any business, no matter what legal
form, including, but not limited to, a sole proprietorship,
partnership, corporation, or limited liability corporation;
3. "Estimated direct state benefits" means the tax revenues
projected by the Oklahoma Department of Commerce to accrue to the
state as a result of new direct jobs;
4. "Estimated direct state costs" means the costs projected by
the Department to accrue to the state as a result of new direct
jobs. Such costs shall include, but not be limited to:
a. the costs of education of new state resident children,
b. the costs of public health, public safety and
transportation services to be provided to new state
residents,
c. the costs of other state services to be provided to
new state residents, and
d. the costs of other state services;
5. "Estimated net direct state benefits" means the estimated
direct state benefits less the estimated direct state costs;
6. "Full-time employment" means employment of persons residing
in this state and working for thirty (30) hours per week or more in
this state, which has a minimum six-month duration during any
twelve-month period;
7. "Gross taxable payroll" means wages, as defined in Section
2385.1 of this title, for new direct jobs;
8. "Net benefit rate" means the estimated net direct state
benefits computed as a percentage of gross payroll; provided:
a. the net benefit rate may be variable and shall not
exceed five percent (5%), and
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b. in no event shall incentive payments, cumulatively,
exceed the estimated net direct state benefits; and
9. "New direct job" means full-time employment which did not
exist in this state prior to the date of approval, by the Oklahoma
Department of Commerce, of an application made pursuant to the Small
Employer Quality Jobs Incentive Act. A job shall be deemed to exist
in this state prior to approval of an application if the activities
and functions for which the particular job exists have been ongoing
at any time within six (6) months prior to such approval; and
10. "Qualifying capital investment" means new construction of
real property, new renovation of existing real property, or purchase
of new machinery used in the manufacturing process that occurs after
the date of application. It does not include purchase of existing
real property.
SECTION 2. AMENDATORY 68 O.S. 2021, Section 3904, is
amended to read as follows:
Section 3904. A. An establishment which meets the
qualifications specified in the Small Employer Quality Jobs
Incentive Act may receive quarterly incentive payments for a seven-
year period from the Oklahoma Tax Commission pursuant to the
provisions of the Small Employer Quality Jobs Incentive Act in an
amount equal to the net benefit rate multiplied by the actual gross
taxable payroll of new direct jobs as verified by the Tax
Commission.
B. In order to receive incentive payments, an establishment
shall apply to the Oklahoma Department of Commerce. The application
shall be on a form prescribed by the Department and shall contain
such information as may be required by the Department to determine
if the applicant is qualified. The establishment may apply for an
effective date for a project, which shall not be more than twelve
(12) months from the date the application is submitted to the
Department.
C. Before approving an application for incentive payments, the
Department must first determine that the applicant meets the
following requirements:
1. Be engaged in a basic industry;
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2. Has no more than five hundred full-time employees in this
state on the date of application nor an average of more than five
hundred full-time employees in this state during the four calendar
quarters immediately preceding the date of application;
3. Has a projected minimum employment, as determined by the
Department, of new direct jobs within twelve (12) months of the date
of application, or after July 1, 2011, within twenty-four (24)
months of the date of application, as follows:
a. if the establishment is located in a municipality with
a population less than three thousand five hundred
(3,500) fifty thousand (50,000) persons, as determined
by the Department of Commerce based on the most recent
U.S. Department of Commerce data, or if the
establishment is located in an unincorporated area and
the largest closest municipality within twenty (20)
miles of the establishment is such a municipality, new
direct jobs equal to the greater of five (5) jobs or
five percent (5%) of the company's full-time
employment at the date of application, and
b. if the establishment is located in a municipality with
a population of three thousand five hundred (3,500)
persons or more but less than seven thousand (7,000)
persons, as determined by the Department of Commerce
based on the most recent U.S. Department of Commerce
data, or if the establishment is located in an
unincorporated area and the largest municipality
within twenty (20) miles of the establishment is such
a municipality, new direct jobs equal to the greater
of ten (10) jobs or seven and one-half percent (7.5%)
of the company's full-time employment at the date of
the application, and
c. if the establishment is located in a municipality with
a population of seven thousand (7,000) fifty thousand
(50,000) persons or more, as determined by the
Department of Commerce based on the most recent U.S.
Department of Commerce data, or if the establishment
is located in an unincorporated area and the largest
closest municipality within twenty (20) miles of the
establishment is such a municipality, new direct jobs
equal to the greater of fifteen (15) ten (10) jobs or
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ten percent (10%) of the company's full-time
employment at the date of application.
Provided, for an establishment engaged in software publishing as
defined or classified in the NAICS Manual under Industry Group No.
5112, data processing, hosting and related services as defined or
classified in the NAICS Manual under Industry Group No. 5182,
computer systems design and related services as defined or
classified in the NAICS Manual under Industry Group No. 5415,
scientific research and development services as defined or
classified in the NAICS Manual under Industry Group No. 5417,
medical and diagnostic laboratories as defined or classified in the
NAICS Manual under Industry Group No. 6215 or testing laboratories
as defined or classified in the NAICS Manual under U.S. Industry No.
541380, the projected minimum employment requirements of this
paragraph must be achieved within thirty-six (36) months of the date
of application;
4. Has or will have within twelve (12) months of the date of
application, or after July 1, 2011, within twenty-four (24) months
of the date of application, as determined by the Department,
qualifying capital investment greater than Five Hundred Thousand
Dollars ($500,000.00) or sales of at least thirty-five percent (35%)
for the first two (2) years and subsequently sixty percent (60%) of
its total sales to out-of-state customers or buyers, to in-state
customers or buyers if the product or service is resold by the
purchaser to an out-of-state customer or buyer for ultimate use, or
to the federal government, of its total sales to out-of-state
customers or buyers, to in-state customers or buyers if the product
or service is resold by the purchaser to an out-of-state customer or
buyer for ultimate use, or to the federal government except that:
a. those establishments in the NAICS Manual under the
U.S. Industry No. 541710 or 541380 are excused from
the out-of-state sales requirement, and
b. warehouses that serve as distribution centers for
retail or wholesale businesses shall be required to
distribute forty percent (40%) of inventory to out-of-
state locations, and
c. adjustment and collection services activities defined
or classified in the NAICS Manual under U.S. Industry
No. 561440 shall be required to have seventy-five
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percent (75%) of loans to be serviced made by out-of-
state debtors;
5. Will pay the individuals it employs in new direct jobs an
average annualized wage which equals or exceeds:
a. one hundred twenty-five percent (125%) of the average
county wage of small employers located in that county
as that percentage is determined by the Department of
Commerce based on the most recent wage and employment
data from the Oklahoma Employment Security Commission
for the county in which the new direct jobs are
located. For purposes of this subparagraph, health
care premiums paid by the applicant for individuals in
new direct jobs shall be included in the annualized
wage, or
b. one hundred ten percent (110%) of the average county
wage of small employers located in that county as that
percentage is determined by the Department of Commerce
based upon the most recent wage and employment data
from the Oklahoma Employment Security Commission for
the county in which the new direct jobs are located.
For purposes of this subparagraph, health care
premiums paid by the applicant for individuals in new
direct jobs shall not be included in the annualized
wage, or
c. one hundred percent (100%) of the average county wage,
excluding health care premiums paid by the applicant
for individuals in new direct jobs if the county in
which the new jobs are located has:
(1) according to the most recent annual determination
by the Oklahoma Employment Security Commission, a
county unemployment rate more than ten percent
(10%) higher than the state unemployment rate,
and
(2) according to the most recent United States Census
Bureau Data, a county personal poverty rate above
fifteen percent (15%);
6. Has a basic health benefit plan which, as determined by the
Department, meets the elements established under divisions (1)
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through (7) of subparagraph b of paragraph 1 of subsection A of
Section 3603 of this title and which will be offered to individuals
within twelve (12) months of employment in a new direct job; and
7. Has not received incentive payments under the Oklahoma
Quality Jobs Program Act, the Saving Quality Jobs Act, or the Former
Military Facility Development Act; and
8. Is not qualified for approval of an application for
incentive payments under the Oklahoma Quality Jobs Program Act, the
Saving Quality Jobs Act, or the Former Military Facility Development
Act.
D. The Oklahoma Department of Commerce shall determine if an
applicant is qualified to receive the incentive payment. Upon
qualifying the applicant, the Department shall notify the Tax
Commission and shall provide it with a copy of the application, and
approval which shall provide the number of persons employed by the
applicant upon the date of approval and the maximum total incentives
which may be paid to the applicant during the seven-year period.
The Tax Commission may require the qualified establishment to submit
additional information as may be necessary to administer the
provisions of the Small Employer Quality Jobs Incentive Act. The
approved establishment shall report to the Tax Commission quarterly
to show its continued eligibility for incentive payments, as
provided in Section 3905 of this title. Establishments may be
audited by the Tax Commission to verify such eligibility. Once the
establishment is approved, an agreement shall be deemed to exist
between the establishment and the State of Oklahoma, requiring
incentive payments to be made for a seven-year period as long as the
establishment retains its eligibility and within the limitations of
the Small Employer Quality Jobs Incentive Act which existed at the
time of such approval. Any establishment which has been approved
for incentive payments prior to July 1, 2002, shall continue to
receive such payments pursuant to the laws as they existed prior to
July 1, 2002, for any period of time of the original five-year
period for such payments remaining after July 1, 2002.
E. For any contract executed by an establishment on or after
August 2, 2018, five percent (5%) of the quarterly incentive payment
amount shall be transferred by the Oklahoma Tax Commission to the
Oklahoma Quick Action Closing Fund.
F. Before any incentive payment is made for any contract
executed by an establishment on or after November 1, 2026, the
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Oklahoma Department of Commerce shall determine if the qualifying
capital investment has occurred or the out-of-state sales threshold
has been achieved. The Oklahoma Department of Commerce shall notify
the Tax Commission upon approval by the Oklahoma Department of
Commerce. If this approval has not occurred within thirty-six (36)
months of the application date, the contract shall be cancelled by
the Oklahoma Department of Commerce and no incentive shall be paid.
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Passed the House of Representatives the 6th day of May, 2026.
Presiding Officer of the House
of Representatives
Passed the Senate the 5th day of May, 2026.
Presiding Officer of the Senate
OFFICE OF THE GOVERNOR
Received by the Office of the Governor this ____________________
day of ___________________, 20_______, at _______ o'clock _______ M.
By: _________________________________
Approved by the Governor of the State of Oklahoma this _________
day of ___________________, 20_______, at _______ o'clock _______ M.
_________________________________
Governor of the State of Oklahoma
OFFICE OF THE SECRETARY OF STATE
Received by the Office of the Secretary of State this __________
day of ___________________, 20_______, at _______ o'clock _______ M.
By: _________________________________