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STATE OF OKLAHOMA
2nd Session of the 60th Legislature (2026)
COMMITTEE SUBSTITUTE
FOR
SENATE BILL 102 By: Rader of the Senate
and
Tedford of the House
COMMITTEE SUBSTITUTE
An Act relating to income tax; amending 68 O.S. 2021,
Section 2362, which relates to nonresident taxable
income; defining terms; excluding certain
compensation of certain nonresidents; amending 68
O.S. 2021, Sections 2385.2 and 2385.3, as amended by
Section 11, Chapter 113, O.S.L. 2023 (68 O.S. Supp.
2025, Section 2385.3), which relate to withholding;
prohibiting requirement of employers to withhold
taxes from certain compensation; prohibiting
imposition of penalty and interest if certain
conditions are met; updating statutory language;
updating statutory references; and providing an
effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 2362, is
amended to read as follows:
Section 2362. A. As used in this section:
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1. “Professional athlete” means the same as the term is defined
in 8 U.S.C., Section 1154(i)(2);
2. “Professional entertainer” means a person who performs
services in the professional performing arts for compensation on a
per-event basis; and
3. “Public figure” means a person of prominence who performs
services at discrete events, including, but not limited to,
speeches, public appearances, or similar events, for compensation on
a per-event basis. The term does not include a member of a board of
directors or similar governing body of a business.
B. For tax years beginning on or after January 1, 1994 year
1994 and subsequent tax years, the Oklahoma taxable income of a
part-year resident individual, nonresident individual, a nonresident
trust, and a nonresident estate shall be calculated following the
provisions of Section 2358 of this title as if all income were
earned in Oklahoma.
B. C. Using Oklahoma income tax rates, part-year resident
individuals, nonresident individuals, nonresident trusts, and
nonresident estates shall compute their tax liability on the amount
computed in the preceding paragraph subsection B of this section.
C. D. From the liability computed there shall be deducted all
allowable credits to determine the amount of tax due.
D. E. Part-year resident individuals, nonresident individuals,
nonresident trusts, and nonresident estates shall divide adjusted
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gross income from Oklahoma sources by the adjusted gross income from
all sources to arrive at the applicable percentage that Oklahoma
adjusted gross income represents of all adjusted income received by
the taxpayer in the income year.
E. F. Part-year resident individuals, nonresident individuals,
nonresident trusts, and nonresident estates shall multiply the
amount of Oklahoma tax computed by the applicable percentage
calculated in the preceding paragraph subsection E of this section
in order to determine the amount of income tax which must be paid to
the State of Oklahoma this state. Nothing in this section shall be
construed to allow for greater than one hundred percent (100%) of a
taxpayer’s income to be taxed.
F. G. For purposes of determining the adjusted gross income
from Oklahoma, the following shall be includable:
1. The ownership of any interest in real or tangible personal
property in this state;
2. A Except as provided for in subsection H of this section, a
business, trade, profession, or occupation carried on in this state
or compensation for services performed in this state;
3. A Except as provided for in subsection H of this section, a
business, trade, profession, or occupation carried on or
compensation for services performed partly within and partly without
this state to the extent allocable and apportionable to Oklahoma as
determined under Section 2358 of this title;
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4. The distributive share of the Oklahoma part of partnership
income, gains, losses, or deductions;
5. The distributive share of the Oklahoma part of estate or
trust income, gains, losses, or deductions;
6. Income from intangible personal property, including
annuities, dividends, interest, and gains from the disposition of
intangible personal property to the extent that such income is from
property employed in a trade, business, profession, or occupation
carried on in Oklahoma. A part-year resident individual,
nonresident individual, nonresident trust, or nonresident estate,
other than a dealer holding property primarily for sale to customers
in the ordinary course of trade or business, shall not be deemed to
carry on a business, trade, profession, or occupation in Oklahoma
solely by reason of the purchase and sale of property for its own
account;
7. The distributive share of the Oklahoma taxable income or
loss of a corporation defined in subchapter S of the Internal
Revenue Code of 1986, as amended, 26 U.S.C., Section 1361 et seq.;
8. Income received from all sources of wagering, games of
chance, or any other winnings from sources within this state.
Proceeds which are not money shall be taken into account at their
fair market value; and
9. The distributive share of the Oklahoma part of limited
liability company income, gains, losses, or deductions.
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H. For tax year 2027 and subsequent tax years, compensation
paid to a nonresident individual shall not be includable for
purposes of determining the adjusted gross income from Oklahoma if
the following conditions apply:
1. The compensation is paid for employment duties performed by
the individual while present in this state for thirty (30) or fewer
calendar days in the tax year; and
2. The individual performed employment duties in more than one
state during the tax year.
I. The provisions of subsection H of this section shall not
apply to compensation paid to an individual in the capacity of a
professional athlete, professional entertainer, or public figure.
J. For purposes of this section, an individual shall be
considered present and performing employment duties within this
state for a day if the individual performs more of the employment
duties of the individual in this state than in any other state
during that day. Any portion of the day during which the individual
is in transit shall not be considered in determining the location of
the performance of employment duties of the individual.
SECTION 2. AMENDATORY 68 O.S. 2021, Section 2385.2, is
amended to read as follows:
Section 2385.2. A. Every employer making payment of wages
shall deduct and withhold from the wages paid each employee a tax in
an amount determined in accordance with a table fixing graduated
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rates of tax to be withheld, which table shall be devised by the
Oklahoma Tax Commission and fix the rate of such tax to be withheld
from each employee as a percentage of the amount of federal income
tax withheld under the Internal Revenue Code, and/or or a percentage
of the amount of salary paid to the employee, giving consideration
to the approximate amount of the state tax liability of any such
employee, if such employee-taxpayer were to elect to use the
standard deduction. Such table shall be published by the Oklahoma
Tax Commission and furnished to all employers filing income
withholding tax returns as required by law.
B. Whenever the amount to be withheld from the wages of an
employee is calculated to total less than twenty-five cents ($0.25)
in any quarterly period of a year, the provisions of subsection A of
this section shall not apply.
C. Every person, including the government of the United States,
a state or a political subdivision thereof or any instrumentalities
of the foregoing, making any payment of winnings which are subject
to withholding shall deduct and withhold from such payment a tax in
an amount equal to four percent (4%) of such payment.
D. An employer shall not be required to withhold taxes for
compensation that is paid to an individual as described in
subsection H of Section 2362 of this title, except that if, during
the taxable year, the individual performs employment duties while
present in this state for more than thirty (30) calendar days, an
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employer shall withhold and remit taxes for every day the individual
performed employment duties while present in this state in that tax
year, including the first thirty (30) days in which the individual
performed employment duties in this state.
SECTION 3. AMENDATORY 68 O.S. 2021, Section 2385.3, as
amended by Section 11, Chapter 113, O.S.L. 2023 (68 O.S. Supp. 2025,
Section 2385.3), is amended to read as follows:
Section 2385.3. A. Every employer required to deduct and
withhold taxes under Section 2385.2 of this title shall pay over the
amount so withheld as taxes to the Oklahoma Tax Commission pursuant
to the schedule outlined in paragraphs 1 through 3 of this
subsection, and shall file a quarterly return in such form as the
Tax Commission shall prescribe on or before the twentieth day of the
month following the close of each calendar quarter:
1. Every employer required to remit federal withholding under
the Federal Semiweekly Deposit Schedule shall pay over the amount so
withheld under subsection A of this section subsection on the same
dates as required under the Federal Semiweekly Deposit Schedule for
federal withholding taxes;
2. Every employer owing an average of Five Hundred Dollars
($500.00) or more per quarter in taxes in the previous fiscal year
who is not subject to the provisions of paragraph 1 of this
subsection shall pay over the amount so withheld on or before the
twentieth day of each succeeding month; and
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3. Every employer owing an average of less than Five Hundred
Dollars ($500.00) per quarter in taxes in the previous fiscal year
shall pay over the amount so withheld on or before the twentieth day
of the month following the close of each succeeding quarterly
period.
B. Every employer subject to the provisions of paragraph 1 of
subsection A of this section shall file returns pursuant to the Tax
Commission’s electronic data interchange program.
C. Every employer required under Section 2385.2 of this title
to deduct and withhold a tax from the wages paid an employee shall,
as to the total wages paid to each employee during the calendar
year, furnish to such employee, on or before January 31 of the
succeeding year, a written statement showing the name of the
employer, the name of the employee and the employee’s Social
Security account number, if any, the total amount of wages subject
to taxation, and the total amount deducted and withheld as tax and
such other information as the Tax Commission may require. If an
employee’s employment is terminated before the close of a calendar
year, the written statement must be furnished within thirty (30)
days of the date of which the last payment of wages is made.
D. Every employer required under Section 2385.2 of this title
to deduct and withhold a tax from the wages paid an employee shall
furnish to the Oklahoma Tax Commission, on or before January 31 of
the succeeding year, an annual reconciliation and such other
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information as the Tax Commission may require pursuant to the Tax
Commission’s electronic data interchange program. Failure of an
employer to provide an annual reconciliation within thirty (30) days
of the due date may result in a penalty to be imposed on the
employer in an amount not to exceed One Thousand Dollars
($1,000.00). The additional penalty may be collected in the same
manner as provided by law for collection of delinquent taxes.
E. If the Tax Commission, in any case, has justifiable reason
to believe that the collection of the tax provided for in Section
2385.2 of this title is in jeopardy, the Tax Commission may require
the employer to file a return and pay the tax at any time.
F. Any sum or sums withheld in accordance with the provisions
of Section 2385.2 of this title shall be deemed to be held in trust
for the State of Oklahoma, and, as trustee, the employer shall have
a fiduciary duty to the State of Oklahoma in regard to such sums and
shall be subject to the trust laws of this state.
G. If any employer fails to withhold the tax required to be
withheld by Section 2385.2 of this title and thereafter the income
tax is paid by the employee, the tax so required to be withheld
shall not be collected from the employer but such employer shall not
be relieved from the liability for penalties or interest otherwise
applicable because of such failure to withhold the tax.
H. Every person making payments of winnings subject to
withholding shall, for each monthly period, on or before the
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twentieth day of the month following the payment of such winnings
pay over to the Tax Commission the amounts so withheld, and shall
file a return, in a form as prescribed by the Tax Commission.
I. Every person making payments of winnings subject to
withholding shall furnish to each recipient on or before January 31
of the succeeding year a written statement in a form as prescribed
by the Tax Commission. Every person making such reports shall also
furnish a copy of such report to the Tax Commission in a manner and
at a time as shall be prescribed by the Tax Commission.
J. The Oklahoma Tax Commission shall not impose any penalty or
interest on an employer for failure to withhold taxes from
nonresident employee compensation if, when determining whether
withholding was required, the employer met either of the following
conditions:
1. The employer, in its sole discretion, maintains a time and
attendance system specifically designed to allocate employee wages
for income tax purposes among all taxing jurisdictions in which an
individual performs employment duties for such employer, and the
employer relied on data from that system; or
2. The employer does not maintain a time and attendance system
and the employer relied on the following:
a. records of the employer, maintained in the regular
course of business, of the location of the employee,
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b. the reasonable determination of the employee of the
time such employee expected to spend performing
employment duties in this state, provided that the
employer did not have actual knowledge of fraud on the
part of the individual in making the determination and
that the employer and the individual did not conspire
to evade taxation in making the determination,
c. travel records,
d. travel expense reimbursement records, or
e. a signed, written statement from the employee of the
number of days spent performing services in this state
during the tax year.
K. As used in this section, “time and attendance system” means
a system through which an individual is required to record the work
location of the individual for every day worked outside the state
where the employment duties of the individual are primarily
performed and which is designed to allow the employer to allocate
the compensation of the individual for income tax purposes among all
states in which the individual performs employment duties for the
employer.
SECTION 4. This act shall become effective November 1, 2026.
60-2-2408 QD 2/23/2026 5:26:13 PM